On Wednesday (December 25), Bitcoin experienced violent fluctuations upward, briefly reaching a high of $99,480 before falling back to around $98,000. Investment research firm BCA Research expects that the Federal Reserve may be forced to cut rates by more than 50 basis points in 2025, citing the loss of momentum in the labor market and the potential temporary inflation spike from tariffs implemented by the newly elected President Donald Trump.

The Federal Reserve cut rates by 25 basis points on December 19 as expected, but the bank released hawkish signals afterward, suggesting a slowdown in the pace of rate cuts in 2025, with only two 25 basis point cuts expected next year, less than the four previously anticipated in September, leading to turmoil in the cryptocurrency market.

Under hawkish pressure, the dollar index has risen above 108, and Bitcoin has struggled to hold above the $100,000 mark.

Looking ahead to 2025, Trump will be inaugurated on January 20, with the market focusing on the cryptocurrency policies he will implement after taking office, as well as the impact on Federal Reserve monetary policy.

BCA Research released an outlook report stating: 'Currently, the average expectation among FOMC participants is a 50 basis point rate cut in 2025, reducing the federal funds rate target range from 4.25%-4.50% to 3.75%-4.00%.

However, this investment research firm believes that as the core PCE inflation trend declines and the job market weakens, 'a rate cut of more than 50 basis points will be necessary.'

If recent trends continue, the core PCE inflation rate is expected to reach 2.5% by early 2025. The report states: 'If the monthly core PCE inflation rate reaches a 3-month average, then the 12-month inflation rate will reach 2.5% in March. If the monthly core PCE inflation rate reaches a 6-month average, then the 12-month inflation rate will reach 2.5% in February.'

This suggests that the inflation rate may reach or fall below the Federal Reserve's forecast sooner than expected.

Meanwhile, the labor market is losing momentum. The unemployment rate has risen from a cyclical low of 3.4% to 4.2%, and BCA questions the Federal Reserve's year-end forecast of 4.3%.

BCA notes: 'To reach this level, significant improvement in the labor market momentum is needed, and we believe such a trend shift is unlikely to occur.'

In this context, BCA outlined possible rate cut paths, with the first rate cut of 25 basis points potentially occurring in March. Federal Reserve Chair Powell stated last week that the Fed will continue to rely on data and emphasized that next year's rate decisions 'will not change based on anything we write down today; we will respond to the data.'

BCA believes that if the average of three consecutive PCE inflation data is 0.2% or lower, the Federal Reserve may cut rates again by 25 basis points, potentially leading to a total easing of up to 100 basis points by the end of 2025.

The report also discusses the potential impact of tariffs that the incoming Trump administration may implement, noting that although tariffs may temporarily raise inflation, the resulting drag on manufacturing could force the Federal Reserve to accelerate rate cuts in the second half of the year.

The report expects quantitative tightening (QT) to slow in mid-2025 and to come to a complete stop by the end of 2025 or early 2026.

Bitcoin Technical Analysis

According to the 4-hour chart, Bitcoin found support at $92,888. Therefore, the price finds another stronger support at $95,871. However, the Awesome Oscillator (AO) remains negative, indicating bearish momentum.

However, with the emergence of green bars, Bitcoin may avoid another significant drop and rise. If so, Bitcoin's price could reach $104,299 in the short term. Under highly bullish market conditions, the value could rise to $108,386.

On the other hand, falling below the aforementioned support levels could invalidate this forecast. If this occurs, the price of Bitcoin could drop to $92,144.