Important takeaways
- Bitcoin is expected to see strong gains in early January 2025, driven by Trump’s upcoming inauguration and positive inflation data.
- However, the Fed’s January 29 interest rate decision poses a significant risk to this momentum.
- Despite short-term uncertainties, institutional investors continue to show confidence in the asset via large BTC acquisitions.
The cryptocurrency market is at a pivotal time as momentum builds toward President Trump’s January 20 inauguration. While a Donald Trump-led Bitcoin rally is expected to dominate and create a bullish rally, the Federal Reserve’s first interest rate decision of the year, scheduled for January 29, casts a shadow over the market’s momentum.
Trump-led Bitcoin rally predicted to be short-lived amid Federal Reserve concerns
According to a January 5 Report by 10x Research founder Markus Thielen, Bitcoin is poised for a “positive start” to 2025, supported by favorable consumer price index (CPI) inflation data expected on January 15.
Thielen predicts the rally could peak before the opening but warns of a potential pullback ahead of the Federal Open Market Committee (FOMC) meeting later this month.
CME Group’s FedWatch tool indicating an 88.8% chance that the federal target rate will remain between 425 and 450 basis points. Therefore, Thielen expects Bitcoin to settle between $97,000 and $98,000 by the end of January.
Historically, interest rate decisions have strongly affected Bitcoin’s performance, as seen on December 18 when Bitcoin fell nearly 15% to $92,800 after the Fed announced fewer projected rate cuts in 2025.
Institutional Confidence Grows Despite Short-Term Bitcoin Risks
Despite concerns over Federal Reserve policy, institutional investors are doubling down on Bitcoin.
Known for its aggressive Bitcoin accumulation strategy, MicroStrategy aims to raise $2 billion in the first quarter (Q1) of 2025 to purchase additional BTC.
The company currently has 446,400 Bitcoin valued at around $43.7 billion, generating unrealized profits of $16 billion.
Similarly, Japanese venture capital firm Metaplanet has announced plans to increase its holdings to 10,000 BTC.
The potential implementation of a Strategic Bitcoin Reserve under a crypto-friendly Trump administration has further increased long-term optimism.
Analyst at VanEck and Bitwise predict Bitcoin could rise to between $180,000 and $200,000 in 2025 if such initiatives gain traction.
While Bitcoin’s outlook appears strong, Ethereum’s outlook remains less optimistic.
Thielen’s December 30 Report described Ethereum as a “poor mid-term investment,” citing declining validator growth and limited catalysts for price appreciation.
Ethereum’s active validators have dropped by 1% over the past 30 days, raising concerns about its network stability.
