Fundamental Overview
Bitcoin is now up more than 50% since the election day as the bullish momentum in the cryptocurrency exploded following Trump’s victory. This shouldn’t be surprising given that Trump vowed to make the US the crypto capital of the planet.
Another bullish driver has been the US economy which not only has been doing well but started to re-accelerate amid the Fed’s easing and the expectations of expansionary fiscal policies like tax cuts and deregulation.
For now, there’s no real top in sight as we would likely need a contractionary monetary policy or a notable slowdown in the economy, so buying the dips remains the favourite strategy. The risk in 2025 will be inflation and the Fed. If the central bank even slightly mentions the need for some tightening, then we could see some big corrections in all risk assets.
The Fed today is expected to cut by 25 bps bringing the FFR to 4.25-4.50%. We will also get the updated Summary of Economic Projections (SEP) where growth and inflation should be revised upwards, and the Dot Plot will likely show two rate cuts in 2025. Fed Chair Powell should acknowledge the strength in the US data and announce a slowdown in the pace of easing.
This is already priced in as the market expects just two rate cuts in 2025, with the first one coming in March at the earliest. Therefore, the market reaction will be driven by deviations from the expectations.
Bitcoin Technical Analysis – Daily Timeframe
On the daily chart, we can see that Bitcoin is trading above the key 100K level. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline where they will also have the 100K support for confluence. The sellers, on the other hand, will want to see the price breaking lower to extend the pullback into the 90K price area.
Bitcoin Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the setup around the trendline and the 100K support zone. There’s been a pretty choppy price action in the last couple of weeks as the bullish momentum waned a bit. The catalysts to watch now are the FOMC decision today and the inflation data in the next months. We could see a knee-jerk reaction lower on a hawkish cut today even though it’s already priced in. The dip-buyers might take advantage of that to position for a rally into new highs.
Bitcoin Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support around the higher low at 103300 level. The sellers will look for a break lower to extend the pullback into the 100K support, while the buyers will want to see the price breaking above the counter-trendline to target new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we have the FOMC Policy Decision. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE data.
