A potential rally for Bitcoin, driven by political developments surrounding Donald Trump, may lose momentum towards the end of January due to anticipated decisions from the Federal Reserve. According to Markus Thielen, founder of 10x Research, the Federal Reserve’s actions pose the primary risk to Bitcoin’s price trajectory. Thielen anticipates a positive start to the month, with potential gains spurred by favorable Consumer Price Index (CPI) inflation data before Trump’s inauguration on January 20. However, he warns the momentum could diminish before the Federal Open Market Committee (FOMC) meeting scheduled for January 29.
The CME Group’s FedWatch tool currently indicates an 88.8% likelihood that the U.S. federal target rate will remain in the range of 425 to 450 basis points following the FOMC meeting. Historically, Bitcoin suffered a nearly 15% drop, settling around $92,800 after the previous FOMC meeting on December 18, as the anticipated number of interest rate cuts for 2025 was reduced.
Thielen emphasizes that lower inflation is expected this year, though the Federal Reserve may delay in acknowledging and acting upon this shift. The return of institutional investors to the crypto market, reflected in stablecoin minting and Bitcoin exchange-traded fund inflows, is also crucial for Bitcoin’s performance. Despite navigating through uncertainties, Thielen forecasts Bitcoin to hit between $97,000 and $98,000 by the end of January.
John Glover, Chief Investment Officer at crypto lending firm Ledn, projects Bitcoin might decrease to $89,000 before rebounding to $125,000 by the end of the first quarter. He anticipates it may again retreat to $100,000 before potentially reaching $160,000 by late 2025 or early 2026. Glover’s outlook is more conservative compared to other forecasts that predict Bitcoin could soar up to $180,000 or $200,000.
Despite a bearish short-term perspective, the Crypto Fear and Greed Index, which measures market sentiment, recently returned to the “Extreme Greed” zone, registering 76 out of 100 as Bitcoin ascended to $98,850. Prior to this, it had remained in the “Greed” zone for the last ten days, marking a cautious optimism among investors in the ever-volatile cryptocurrency market.
