After a bloodbath in the last weeks of December due to the Fed's hawkish comments, the cryptocurrency market is recovering in the first week of January. Although the market may not witness a major price increase this month as last year with price-depressing events like the CPI report, the FOMC meeting on January 29 and Trump's inauguration on January 20 will determine Bitcoin's fate this month.

Markus Thielen of 10x Research predicts that Bitcoin could see a price surge in early January, driven by optimism surrounding the upcoming inauguration of President-elect Donald Trump. This momentum may be stronger if the inflation data, expected to be released on January 15, aligns with market expectations.

The Consumer Price Index (CPI) report is a significant event, as positive inflation figures could propel Bitcoin prices higher. Additionally, the return of institutional investors and an increase in stablecoin minting could further support Bitcoin's performance. U.S. spot Bitcoin ETFs and inflows are also key indicators to watch. Currently, U.S. Bitcoin ETFs have returned with inflows of $900 million.

Potential Pullback Ahead

Thielen warns that Bitcoin's price surge could face obstacles at the end of January. The Federal Reserve's Federal Open Market Committee (FOMC) meeting on January 29 is expected to keep interest rates stable, which could dampen the upward momentum. This slight decline is predicted to be influenced by the market's reaction to the Fed's decision.

Bitcoin continues to dominate the cryptocurrency market with a 55% market share, making its performance crucial for the broader market trend. Thielen forecasts that Bitcoin will trade between $97,000 and $98,000 by the end of January, considering significant changes in macroeconomic conditions.

Meanwhile, John Glover from Ledn predicts the price will drop to $89,000 before recovering to $125,000 by the end of Q1 and reaching $160,000 by the end of 2025 or early 2026. This figure is slightly lower than VanEck and Bitwise's forecast of $180,000–$200,000. Despite short-term caution, Bitcoin surged to $98,850, indicating a return of investor confidence in the king of cryptocurrencies. Following the price surge, the Crypto Fear and Greed Index shifted to 'Extreme Greed' at 76/100, reflecting strong market optimism.

What Awaits Ahead?

The current Bitcoin downturn is seen as a great opportunity to buy Bitcoin below $100,000 and is considered a normal process. However, all eyes are currently on Trump's election promise if he can introduce cryptocurrency regulations, the most important being the plan to establish a U.S. strategic Bitcoin reserve fund.

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