The central bank surprised with forecasts that were much less optimistic than expected
The correction in the cryptocurrency market is complete. Bitcoin (BTC) has lost more than $10,000 in value since the highs it reached on Tuesday, May 17. At the same time, the market has lost 7% of its market capitalization in the last 24 hours. Is there reason for concern?
The truth is that the market is not clear on this. Some strategists point out that the reaction of bitcoin and cryptocurrencies to the latest monetary policy decision of the Federal Reserve (Fed) underlines the vulnerability of bitcoin to external factors. It is worth remembering that the US central bank has just lowered interest rates, but has announced that it will lower them less often than expected in 2025 and that its projections for next year are less optimistic: inflation will rise due to greater economic growth and lower unemployment.
According to numerous experts, this 'hawkish' stance (hard) from the central bank arises in anticipation of the effects that the policies of elected President Donald Trump may have in the United States –who today, by the way, has promised to raise tariffs on Europe.
Others, on the other hand, highlight that the recent declines present an interesting buying opportunity, as they expect digital assets to shine next year. Much of this optimism is due, precisely, to Trump. The elected president has shown himself to be very favorable to cryptocurrencies and has promised to enact laws favorable to these digital assets, as well as ambitious initiatives such as the creation of a strategic reserve of bitcoins.
But Trump's plans do not convince everyone. "While the impact of Trump's policies remains speculative, weak demand from European economies and China is likely to limit global growth (and inflation). At the same time, a stronger US dollar could affect the corporate profits of American companies," explain the strategists at 10x Research.
Much of the recent market rises are related to Trump, whose electoral victory and subsequent statements have spurred the rally in the cryptocurrency market. The figure of the elected President of the United States has provided a "fundamental support" for this class of assets, and, according to XTB, it will continue to do so in the future.
Hani Abuagla, senior market analyst at XTB MENA, points out that, despite the price volatility, the flows recorded by the BTC exchange-traded funds (ETFs) "remain strongly positive". While over 600 million has been recorded in net outflows in the last day, this expert highlights that, in the last 20 days, net inflows amount to almost $7 billion, suggesting a "sustained" institutional appetite and that the market is "maturing" alongside the funds from BlackRock (IBIT) and Fidelity (FBTC).
"While short-term volatility may persist as markets digest the Fed's political trajectory, the structural demand coming from ETFs and the possible regulatory clarity under a Trump administration could provide support. The interaction between monetary policy, institutional adoption, and political developments suggests that bitcoin will remain sensitive to both macroeconomic and cryptocurrency-specific catalysts throughout 2025," explains this expert.
In this sense, the strategists at Bitwise are much more optimistic. Looking ahead to the next 12 months, these experts predict that bitcoin will reach $200,000 and that major companies in the sector, such as Circle or Kraken, will make their leap to the stock market. Bitwise also predicts that the market for 'stablecoins' could double to $400 billion if the expected stablecoin legislation in the United States is approved.