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The latest report by digital asset research firm 10x Research highlights that the US Federal Reserve’s (Fed) stance on interest rate cuts is still the most important obstacle that could dampen Bitcoin’s (BTC) current rally.
Bitcoin’s Trump-Fueled Rally At Risk Ahead of FOMC Meeting
Since pro-crypto Republican Donald Trump won the November presidential election, Bitcoin has surged a staggering 47%, rising from around $67,500 on November 4th to around $99,700 as of January 6th.
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While further gains are expected during the so-called “Trump rally” leading up to the inauguration on January 20, momentum may stall ahead of the Federal Open Market Committee (FOMC) meeting later in January, said Markus Thielen of 10x Research.
Thielen predicts a “good start” to January for BTC, followed by a slight dip before the release of Consumer Price Index (CPI) inflation data on January 15. A positive CPI report could revive optimism, which could fuel another rally before Trump’s inauguration . However, Thielen cautions that the bullish momentum may decrease before the FOMC meeting on January 29.
The latest data from CME Group’s FedWatch tool shows that interest rates will likely remain unchanged after the upcoming FOMC meeting. The tool currently predicts a 90.9% chance of remaining interest rates of 425 and 450 basis points (BPS).
Bitcoin’s nearly 15% drop to $92,900 following the December 18 FOMC meeting underscores the Fed’s significant influence. This drop came after the Fed signed off on only two rate cuts in 2025 instead of five, reinforcing Thielen’s view that the Fed’s decisions are “the main risk” to BTC’s current bullish trajectory. Thielen says:
We expect inflation to decline this year, although it may take some time for the Federal Reserve to recognize and respond to this change in policy.
Thielen also highlighted institutional participation as an important factor influencing short-term Bitcoin price action, with metrics such as stablecoin minting rates and crypto exchange-traded fund (ETF) inflows serving as indicators of institutional interest.
Institutional Interest In Bitcoin Continues To Rise
While US spot Bitcoin ETFs faced massive outflows at the end of December, new inflows have fueled optimism about growing institutional interest in the main cryptocurrency. Data from SoSoValue notes that Bitcoin ETFs saw $908 million in inflows on January 3.
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In addition, several large BTC mining firms such as MARA again Episode 8 they strengthen their BTC funds. Tech firms like Canada-based video sharing platform Rumble have also recently revealed $20 million BTC strategy.
A separate report for the cryptocurrency exchange Bitfinex he predicts Bitcoin could rise to $200,000 by mid-2025, despite a slight price pullback. At press time, BTC is trading at $101,555, up 3.7% in the last 24 hours.
Featured image from Unsplash, charts from 10x Research, CME FedWatch and Tradingview.com