The recent dip in Bitcoin’s price is being attributed to mounting apprehensions about the United States Federal Reserve’s monetary policies, which are poised to play a pivotal role in shaping Bitcoin’s trajectory throughout 2025, according to market experts interviewed.
Federal Reserve Signals Weigh on Bitcoin
On January 7, Bitcoin briefly crossed the significant $100,000 threshold for the first time since December 19, only to pull back to $92,500 shortly after, as per data.
The correction was primarily fueled by fears surrounding tighter monetary policies anticipated from the Federal Reserve this year, noted Ryan Lee, lead analyst at Bitget Research.
“Bitcoin’s downturn can be traced to strong U.S. economic indicators, which heighten the likelihood of future interest rate increases,” Lee explained. “Such conditions reduce the appeal of cryptocurrencies as an investment while amplifying market volatility as traders react to the Fed’s stance.”
Recent robust economic data has tempered expectations for a Federal Reserve rate cut, now forecasted to happen around mid-June, according to the CME Group’s FedWatch tool. For the upcoming Fed meeting on January 29, market sentiment strongly favors the continuation of current interest rates, with a 95.2% probability of no changes.
Liquidations and Consolidation Risks
Bitcoin’s decline to $92,500 led to the liquidation of over $631 million in leveraged long positions within 24 hours, according to CoinGlass. This event could set the stage for a consolidation period as investors reduce their exposure to leveraged trades.
“Macroeconomic conditions and crypto-specific factors will continue to heavily influence market sentiment,” Lee added, predicting a cautious approach from traders in the near term.
Potential Dip Below $90,000 Before a Major Rally
Some analysts believe Bitcoin might need to revisit the $90,000 level before a significant upward breakout. John Glover, Chief Investment Officer at Ledn and a former Barclays executive, suggested that further corrections could pave the way for a rally toward $126,000.
“We could see Bitcoin test the $90,000 range again as part of the ongoing wave cycle. Following this, the next leg up may push the price into the $126,000–$128,000 region,” Glover told.
Rekt Capital, a prominent crypto analyst, echoed this cautious optimism in a January 8 post on X (formerly Twitter), stating that Bitcoin must hold above the $91,000 support level to avoid further losses.
“Bitcoin’s failure to sustain its daily retest has brought it back into the $91,000–$101,165 trading range,” Rekt Capital noted.
Long-Term Optimism Persists
Despite short-term volatility, analysts maintain a bullish outlook for Bitcoin. Many predict the cryptocurrency could surpass $150,000 by late 2025, driven by a projected $20-trillion expansion in global money supply, which could channel $2 trillion into the Bitcoin market.
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