Bitcoin & the FOMC – ‘A breakout is imminent,’ but for when?

• Bitcoin eyes a potential breakout as the January FOMC meeting approaches.
• Rising inflation expectations and a hawkish Fed stance influence Bitcoin’s uncertain market trajectory.

Bitcoin [BTC] has regained momentum after a brief dip below $95,000. At press time, BTC was trading at $97,276.85, following a 1.54% increase in the last 24 hours, according to CoinMarketCap.

The cryptocurrency’s current trajectory suggests a potential price breakout by the end of January. Interestingly, this coincides with the United States Federal Open Market Committee meeting on the 29th of January.

10x Research analyst predicts Bitcoin’s upcoming move

Markus Thielen, Head of Research at 10x Research, has noted that while a breakout is likely, Bitcoin’s price movement could swing either way from its present level of $96,794. Thus, adding an air of uncertainty to the market’s bullish sentiment.

Stating in a market report dated on the 14th of January, Thielen said,

“Bitcoin trades within a narrowing triangle, signaling a breakout is imminent — likely no later than the January 29 FOMC meeting. From a trading perspective, the best approach is to follow the breakout, regardless of direction,” 

Thielen highlighted that rising expectations for a higher Consumer Price Index (CPI) have created a pivotal moment for BTC’s trajectory.

Should inflation data come in lower than anticipated, it could catalyze a Bitcoin rally.

How will the FOMC meeting affect Bitcoin?

With the January FOMC meeting marking the first interest rate decision of 2025, crypto enthusiasts are closely monitoring the Federal Reserve’s stance, particularly after its hawkish tone in December.

Thielen emphasized the importance of adapting to market movements, suggesting traders follow the breakout direction, whether upward or downward.

In this uncertain environment, he advised cautious risk management, recommending smaller positions and minimal leverage to navigate potential market volatility.

Adding to the intrigue, in its market report, filled on the 13th of January, Bitfinex highlighted the Federal Reserve’s recent shift towards “one of the most hawkish stances from the Fed in recent months.”

This sentiment was reinforced by Fed Chair Jerome Powell’s 4th December statement, signaling fewer rate cuts in 2025 than previously expected—a bearish signal for risk assets like Bitcoin and other cryptocurrencies.

Word of caution

Bitfinex also referenced the CME FedWatch Tool, which indicates a 38.3% probability that no rate cuts will occur in the first half of 2025.

Adding to this cautious outlook, Thielen suggested BTC’s price could begin to consolidate over the next two months as Donald Trump’s presidential term commences on 20th January.

“Due to weak market drivers, Bitcoin will likely remain range-bound until mid-March.”

Moreover, in a 14th January post on X (formerly Twitter), crypto analyst Lark Davis shared,

“Bitcoin is repeating similar price action as the last presidential election and inauguration.” 

He further noted that before Biden’s 2021 inauguration, Bitcoin dipped to $30,000 before rebounding to $55,000 and said,

“While history may not repeat itself, it often rhymes.”

Impact on Bitcoin after the last FOMC meeting

For those unaware, BTC experienced a notable drop of 2.45%, slipping from $62.5K to $60.3K following the release of the September FOMC meeting minutes on the 9th of October.

Thus, as the market braces for the upcoming FOMC meeting, all eyes remain on Bitcoin’s next steps, as its trajectory could set the tone for broader market sentiment.