Cryptocurrency traders have been facing negative days following a series of new BTC records. The recent interest rate decision announced last week has dampened risk appetite in the crypto market. Although BTC attempted to reach six-figure levels in the last 24 hours, it was unsuccessful. What are the expectations for the Fed in the upcoming year?
Fed and 2025
This year, Fed members made significant revisions to their three-year interest rate forecasts. Ultimately, the best projection for 2024 resulted in a 100bp rate cut being implemented. Moreover, the initiation of rate cuts starting with a substantial 50bp reduction has created a sentiment that macroeconomic support for cryptocurrencies will remain strong.
Following this, October’s inflation figures revealed a rising trend after several months. The November inflation data was not as promising, showing an increase from a low of 2.4% back up to 2.7%, making it difficult for numbers to fall below 3%.
The issue here is that inflation has shifted direction and is now on the rise. Powell mentioned that the 2% target is a reachable point within two years, indicating a known reality.
A Pleasant Surprise in 2025
Let’s discuss some positive aspects. The macroeconomic bubbles in cryptocurrency charts have cleared. The market is adopting a more realistic view regarding the Fed’s interest rate policy. Despite all this, BTC price remains around $95,000, with no sharp drop below $90,000 observed.
These developments could lead to significant price increases, enabling bullish revisions of interest rate cut predictions for the upcoming year. Every employment figure and inflation data point could trigger upward momentum in prices.
Indicators reflecting rising unemployment and signs of decreasing inflation will support this upward trend. If the market has priced in negative outcomes, encountering positive news could make the coming year much more enjoyable.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
