Fed Rate Decision Could Derail Trump-Driven Bitcoin Surge, 10x Research Warns

Key Takeaways

• Bitcoin is expected to see strong gains in early January 2025, driven by Trump's upcoming inauguration and positive inflation data.
• However, the Fed's January 29 rate decision poses a significant risk to this momentum.
• Despite short-term uncertainties, institutional investors continue demonstrating confidence in the asset via major BTC acquisitions.

The cryptocurrency market is at a crucial juncture as momentum builds toward President Trump's January 20 inauguration. While a Donald Trump-led Bitcoin rally is expected to dominate and create a bullish rally, the Federal Reserve's first interest rate decision of the year, scheduled for January 29, casts a shadow over the market's momentum.

Trump-Led Bitcoin Rally Predicted to Be Short-Lived Amid Federal Reserve Concerns

According to a January 5 report by 10x Research founder Markus Thielen, Bitcoin is poised for a “positive start” to 2025, supported by favorable Consumer Price Index (CPI) inflation data expected on January 15.

Our #Bitcoin/Crypto Game Plan for January – This Indicator Signals a BTC Rebound

👇1-12) The crypto trading environment remains mixed following the December FOMC meeting and the subsequent holiday season. However, opportunities for returns persist in specific areas. For… pic.twitter.com/otODXb7GgZ

— 10x Research (@10x_Research) January 5, 2025

Thielen predicts the rally could reach a peak before the inauguration but warns of a potential pullback ahead of the Federal Open Market Committee (FOMC) meeting later in the month.

His analysis is grounded on a positive inflation outlook, which he believes could “reignite optimism” in the crypto market. However, the Federal Reserve's decision remains the “primary risk” to Bitcoin's trajectory. 

CME Group’s FedWatch tool indicates an 88.8% chance that the federal target rate will remain between 425 and 450 basis points. Therefore, Thielen expects Bitcoin to settle between $97,000 and $98,000 by the end of January.

Historically, rate decisions have heavily influenced Bitcoin’s performance, as seen on December 18 when Bitcoin dropped nearly 15% to $92,800 after the Fed announced fewer projected rate cuts in 2025.

Institutional Confidence Grows Despite Bitcoin Short-Term Risks

Despite concerns over Federal Reserve policies, institutional investors are doubling down on Bitcoin. 

MicroStrategy, known for its aggressive Bitcoin accumulation strategy, aims to raise $2 billion in the first quarter (Q1) 2025 to purchase additional BTC. 

MicroStrategy targets up to $2 billion capital raise through public offerings of perpetual preferred stock in the first quarter of 2025. $MSTR https://t.co/x1pbB8ArlH

— Michael Saylor⚡️ (@saylor) January 3, 2025

The company currently holds 446,400 Bitcoin valued at approximately $43.7 billion, generating unrealized gains of $16 billion.

Similarly, Japan-based venture capital firm Metaplanet has announced plans to increase its holdings to 10,000 BTC. 

On January 5, CEO Simon Gerovich stated that the firm would use capital market tools to achieve this goal, following a playbook similar to MicroStrategy’s.

The potential implementation of a Strategic Bitcoin Reserve under a crypto-friendly Trump administration has further boosted long-term optimism. 

Analysts at VanEck and Bitwise predict Bitcoin may surge to between $180,000 and $200,000 in 2025 if such initiatives gain traction.

While Bitcoin’s prospects appear strong, Ethereum’s outlook remains less optimistic. 

Thielen’s December 30 report described Ethereum as a “poor medium-term investment,” citing a declining validator growth rate and limited catalysts for price appreciation. 

Ethereum’s active validators have dropped by 1% over the past 30 days, raising concerns about its network stability.