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Highlights
- Bitcoin price retraces as analysts expect the Fed to turn hawkish amid stick inflation with fewer than 4 rate cuts in 2025.
- On-chain data shows heavy profit booking by Bitcoin holders active for 90 to 365 days.
- Historically, BTC has entered strong correction in Week 7 of its price discovery phase.
- Former BitMEX CEO Arthur Hayes expects major turbulence around Donald Trump oath taking in January 2025.
Update: Following the Fed rate cut by 25 basis points, the Bitcoin price crashed further under $100K levels along with the largest single-day drop in the S&P 500 after November 22. This happened as the Fed took a hawkish stand with fewer than expected rate cuts, in 2025. This led to massive liquidations of more than $800 million across the crypto market.
Crypto market analysts noted that Bitcoin price has broken the head-and-shoulder pattern, with the next target of $99,000. In order to invalidate this, it must first cross $105K.
Bitcoin price witnessing strong selling pressure in the Asia hours, slipping under $104K level ahead of the US Fed interest rate decision today. The market’s baseline expectation is a 25 bps rate cut by the central bank, which can lead to some optimism.
Notably, traders are staying cautious before making further moves. Crypto billionaire Arthur Hayes predicted major turbulence in Bitcoin and crypto market during Donald Trump’s oath-taking ceremony on January 20.
Bitcoin Price Retraces Ahead Fed Rate Cut Decision
Just hours before the Fed rate cut decision, Bitcoin price is seeing some selling pressure retracing under $104,000 levels. Bank of America executive Mark Cabana noted that the US central bank is likely to announce a 25 bps rate cut amid concerns about maintaining a restrictive monetary policy for too long. Although labor markets show signs of moderation, inflation remains sticky with CPI surging to 2.8% in November from 2.4% in September.
While the markets have already priced at the 25 basis points rate cut, analysts are curious about the US Fed Chair Powell’s comments on the 2025 monetary policy. Amid stick inflation, the US Federal Reserve might reduce 2025 rate cuts to three from the previously projected four rate cuts. This shows that the US central bank will once again turn hawkish in order to bring inflation under its desired 2% target. Kurt S Altrichter, the founder of Ivory Hill Wealth noted:
“Tomorrow’s Fed meeting isn’t just about the expected rate cut — it’s about how committed the Fed remains to rate cuts in 2025. More cuts = better for stocks and bonds. Fewer cuts = markets adjust expectations”.
On-Chain Data Signals Sell-Off
Amid this uncertainty, short-term holders have opted for heavy profit booking during the recent meeting. On-chain analytics platform Santiment reported that BTC holders holding the asset for 90 to 365 days have been capitalizing on profits above $100K levels.
In contrast, longer-term holders, who were active in the $90,000–$100,000 price range, have shown significantly less activity once the price surpassed $100,000.
Bitcoin Price Retracement Likely This Week
If history repeats, the Bitcoin price is likely to see some retracement this week. As BTC has entered week 7 of its price discovery, popular crypto analyst Rekt Capital expects a pullback ahead. Highlighting data from previous cycles, the analyst notes that:
- In 2013, Bitcoin experienced a pullback during Week 7 of price discovery.
- In 2017, the cryptocurrency retraced by 34% in Week 8.
- In 2021, Bitcoin saw a 16% decline in Week 6.
Thus, if BTC repeats history, we can expect a similar pullback which can take the Bitcoin price under $100K as well. Rekt Capital warns that such corrections are a normal part of Bitcoin’s cycle and have historically erased weeks of gains in a short time. Crypto analyst Ali Martinez also supported this view adding:
“If Bitcoin behaves like in 2017 and 2020, then there will be a brief correction after reaching $110,000, a steep correction after hitting $125,000, a big correction at $150,000, and the end of the bull market at $220,000!”
On the other, BitMEX co-founder Arthur Hayes predicts market correction, forecasting a significant downturn around January 20 — Donald Trump’s presidential inauguration day. Hayes added that his Maelstrom investment fund plans to lighten up certain positions ahead of the anticipated market turbulence.
Furthermore, most of the spot Bitcoin ETF issuers witnessed net outflows on Tuesday. Fidelity’s FBTC, Grayscale’s GBTC, Bitwise’s BITB, saw net outflows yesterday. However, BlackRock’s IBIT offset this impact with a massive $741 million inflows, thereby putting total inflows to $493 million.
Traders are going with liquidation, investors may not sell their holdings as top analysts including Peter Brandt predicted Bitcoin price to hit $125K.
As of press time, BTC price is trading 2.5% down at $103,820, with its daily trading volume dropping 10%. The Coinglass liquidation data also shows $71 million in BTC liquidation in the last 24 hours. with $48 million in long liquidations.
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