Bitcoin price, which witnessed strong selling pressure earlier in the day, fell below the $104,000 level ahead of the US Fed’s interest rate decision today. The market’s main expectation is for a 25 basis point rate cut by the central bank, which could lead to some optimism. Notably, traders are cautious before making further moves. Crypto billionaire Arthur Hayes predicted major turbulence in Bitcoin and the crypto market during Donald Trump’s inauguration on January 20.
Bitcoin price retreats ahead of Fed rate cut decision
Just hours before the Fed’s rate cut decision, the price of Bitcoin is seeing some selling pressure, falling below the $104,000 level. Bank of America executive Mark Cabana said the US central bank could announce a 25 basis point rate cut amid concerns about maintaining a restrictive monetary policy for too long. Although labor markets are showing signs of moderation, inflation remains sticky with CPI rising from 2.4% in September to 2.8% in November.
While markets have already priced in a 25 basis points rate cut, analysts are keen to hear Fed Chair Powell’s comments on monetary policy for 2025. In an environment of rising inflation, the US Federal Reserve may reduce the four rate cuts previously projected for 2025 to three. This suggests that the US Federal Reserve will once again turn hawkish in order to push inflation below its desired 2% target. Kurt S Altrichter, founder of Ivory Hill Wealth, noted:
Tomorrow’s Fed meeting is not only about the expected rate cut, but also about how much the Fed will stick to rate cuts in 2025. More cuts = better for stocks and bonds. Fewer cuts = markets adjust expectations
Data points to sales
Amid this uncertainty, short-term holders opted for heavy profit booking during the last meeting. On-chain analytics platform Santiment reported that BTC holders who held the asset for 90 to 365 days benefited from profits above the $100,000 level. In contrast, longer-term holders who were active in the $90,000 to $100,000 price range showed significantly less activity when the price exceeded $100,000.
If history repeats itself, the Bitcoin price is likely to see some pullback this week. As BTC enters the 7th week of price discovery, popular crypto analyst Rekt Capital expects a pullback ahead. Highlighting data from previous cycles, the analyst notes
- In 2013, Bitcoin experienced a pullback in Week 7 of price discovery.
In 2017, the cryptocurrency retreated by 34% in week 8.
In 2021, Bitcoin suffered a 16% decline in week 6.
So, if BTC repeats history, we can expect a similar pullback that could push the Bitcoin price below $100K. Rekt Capital warns that such corrections are a normal part of the Bitcoin cycle and have historically erased weeks of gains in a short period of time.BitMEX co-founder Arthur Hayes predicts a correction in the market, predicting a significant pullback around January 20, the day of Donald Trump’s presidential inauguration. Hayes added that the Maelstrom investment fund plans to lighten certain positions ahead of the expected market turbulence.
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