As we approach the inauguration of President-elect Donald Trump on January 20, 2025, market analysts and experts are predicting a potential rally in the price of Bitcoin. In this article, we will explore the factors that could influence the price of Bitcoin in the coming weeks and months.
A Rally Before the Inauguration?
According to Markus Thielen, founder of 10x Research, a "positive start" is expected in early January, followed by a slight pullback ahead of Consumer Price Index (CPI) inflation data on January 15. However, if the CPI print is favorable, it could reignite optimism and fuel a rally into the Trump inauguration.
"A favorable inflation print could be a catalyst for a Bitcoin rally," Thielen said in a January 5 report. "However, this momentum may wane ahead of the Federal Open Market Committee (FOMC) meeting on January 29."
The FOMC Meeting: A Key Risk
The FOMC meeting is a critical event that could impact the price of Bitcoin. The CME Group’s FedWatch tool currently shows an 88.8% chance that the US federal target rate will remain between 425 and 450 basis points following the meeting.
In December, the FOMC trimmed the number of projected interest rate cuts from five to two, which led to a nearly 15% decline in Bitcoin’s price to around $92,800. Thielen notes that this event is the "primary risk" behind a Bitcoin rally in 2025.
Lower Inflation Expectations
Thielen also expects lower inflation this year, although it may take some time for the Federal Reserve to recognize and respond to this shift formally. Another key factor will be the pace at which institutional investors return to the crypto market, reflected through stablecoin minting and spot Bitcoin exchange-traded fund inflows.
A Bullish Outlook
Thielen expects Bitcoin to be in the $97,000 to $98,000 range by January’s end. Meanwhile, Ledn’s chief investment officer, John Glover, predicts that Bitcoin may pull back to $89,000 before rebounding and hitting $125,000 by the end of the first quarter.
From there, Glover expects Bitcoin to retrace to $100,000 once more before making an attack toward $160,000 in late 2025 or early 2026. This prediction is more conservative than those made by asset management firms VanEck and Bitwise, which have predicted prices of $180,000 and $200,000, respectively.
Market Sentiment: From Fear to Greed
Despite the bearish short-term outlooks, the Crypto Fear & Greed Index has returned to the "Extreme Greed" zone with a score of 76 out of 100 on January 5. This marks a significant shift from the previous day’s reading and indicates that market sentiment is increasingly bullish.
What’s Next for Bitcoin?
As we approach the FOMC meeting, investors will be watching closely to see how the Federal Reserve responds to inflation expectations. A dovish response could lead to a rally in Bitcoin, while a hawkish response may lead to a pullback.
In addition to the FOMC meeting, institutional investors and stablecoin minting activity will also play a crucial role in determining the direction of Bitcoin’s price. As Thielen notes, "The pace at which institutional investors return to the crypto market is a key factor that could impact the price of Bitcoin."
Conclusion
In conclusion, while there are various opinions on what lies ahead for Bitcoin, one thing is clear: January 2025 will be an exciting time for cryptocurrency markets. With a potential rally before the inauguration, a pivotal FOMC meeting, and shifting market sentiment, investors should be prepared for anything.
As Thielen notes, "The primary risk behind a Bitcoin rally in 2025 is the Federal Reserve’s response to inflation expectations." However, with lower inflation expected this year and institutional investors returning to the market, the conditions are ripe for a bullish run.
Whether you’re a seasoned investor or just starting out, it’s essential to stay informed about the latest developments in cryptocurrency markets. Stay tuned for more updates on Bitcoin’s price action and get ready for what promises to be an exciting ride.
