Potential Decline in Bitcoin Rally Anticipated Before January FOMC Meeting
Bitcoin’s anticipated rally, spurred by Donald Trump’s upcoming presidential inauguration on January 20, faces potential headwinds as the Federal Reserve’s first interest rate decision of the year approaches on January 29.
Markus Thielen, founder of 10x Research, highlights the Fed’s policies as a key risk for Bitcoin’s price trajectory. In his analysis, Bitcoin may see early gains in January, bolstered by optimism surrounding the January 15 Consumer Price Index (CPI) data release. A favorable inflation report could further drive prices upward ahead of the inauguration.
However, Thielen warns of a slowdown leading up to the Federal Open Market Committee (FOMC) meeting. The CME Group’s FedWatch tool projects an 88.8% likelihood that the federal funds rate will hold steady between 425 and 450 basis points. This caution follows Bitcoin’s 15% decline to $92,800 after the December 18 FOMC meeting, which scaled back expectations for 2025 rate cuts from five to two.
Thielen predicts Bitcoin’s price will stabilize between $97,000 and $98,000 by late January. Meanwhile, John Glover, CIO at Ledn, forecasts a temporary dip to $89,000, followed by a rebound to $125,000 by Q1’s end. Long-term projections remain bullish, with Bitcoin potentially reaching $160,000 by late 2025.
Despite short-term volatility, sentiment is strong. The Crypto Fear & Greed Index entered the “Extreme Greed” zone with a score of 76, reflecting Bitcoin’s recent rise to $98,850. Investors remain optimistic, but caution is advised as macroeconomic pressures loom.
