Bitcoin's rally cooled after briefly surpassing its all-time high of $108,000, as traders await the Federal Reserve's anticipated rate decision. Analysts suggest tonight's FOMC meeting could shape Bitcoin's momentum through the holiday season.
Market Expectations for Fed's December Decision
The Federal Reserve is expected to announce a 25-basis-point rate cut at 3 AM EST on December 19. Key insights:
- 95.4% probability of a rate cut (per CME FedWatch Tool).
- Federal funds rate would drop to 4.25%-4.50%, marking the third consecutive cut since September.
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Potential 2025 Rate Hike Pause
- Traders price in an 80% chance rates will hold steady after January 2025.
- Only 16.3% probability of further cuts by mid-2025, potentially tightening market liquidity.
Bitcoin Price Volatility and Trump's "Crypto Rally"
After peaking at $108,365**, BTC corrected to **$103,600 (-4.4%) amid profit-taking. Current trends:
- 24-hour gain: ~2.4% ($103,933 at press time).
- "Trump Effect": Pro-crypto policies (e.g., Bitcoin national reserve plans) fueled a 59% surge from pre-election levels (~$68,000).
Analyst Perspectives
K33 Research notes:
"FOMC decisions may amplify volatility, but year-end liquidity could bolster Bitcoin's momentum."
0x Research models suggest an 83.3% chance BTC reaches $120,000 by January 2025—coinciding with Trump's inauguration.
Key Risks and Considerations
- "Priced In" Scenario: If the Fed meets expectations, Bitcoin may see a short-term pullback as markets digest the news.
- Bearish Surprise: A pause in cuts (unlikely but possible) could trigger sharp declines.
- Caution Advised: Experts warn against FOMO buying at current levels.
FAQ: Fed Rate Cuts and Bitcoin
Q: How do Fed rate cuts affect Bitcoin?
A: Lower rates typically weaken the dollar, making BTC more attractive as a hedge against inflation.
Q: Why might the Fed pause cuts in 2025?
A: Strong U.S. growth and inflationary risks from fiscal policies could prompt caution.
Q: Is Bitcoin's rally sustainable?
A: While bullish sentiment prevails, technical corrections are healthy in volatile markets.
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