The year 2025 begins under the sign of instability for the cryptocurrency market. After briefly surpassing the symbolic threshold of $100,000 on January 7, Bitcoin experienced a spectacular turn, with a drop to $92,500 within hours. This sudden pullback is not explained by a technical factor but by significant macroeconomic elements. Investors are closely watching the monetary policy of the U.S. Federal Reserve (Fed), whose decisions directly influence financial markets. So far, many anticipated a rate cut already in the first quarter of 2025. However, the latest economic data in the United States indicates stronger-than-expected growth, which questions this hypothesis. As a result, markets are reevaluating their expectations and adjusting their positions. This uncertainty has triggered a wave of liquidations that dragged Bitcoin down.
A market on alert for the Fed's decisions
For several weeks, the evolution of U.S. monetary policy has heavily weighed on financial markets, especially in cryptocurrencies. Initially, many investors expected a rate cut as early as the first quarter of 2025, a perspective that would have supported Bitcoin's bullish momentum. However, the latest economic indicators published in the United States show a more resilient economy than anticipated. This finding casts doubt on the hypothesis of a rapid easing of monetary policy and pushes the Federal Reserve (Fed) to consider a prolonged maintenance of high rates.
This reevaluation has had an immediate impact on the markets. Ryan Lee, chief analyst at Bitget Research, emphasizes that 'solid economic data in the United States suggests that the Fed could keep rates high longer than expected, which weighs directly on risk assets like Bitcoin.' The announcement of this outlook has triggered a massive wave of liquidations, with over $631 million in long positions liquidated in just 24 hours, according to CoinGlass data.
In this context, investor expectations have evolved. While they expected a first rate cut as early as March 2025, projections from the CME Group's FedWatch tool indicate that the Fed could wait until June 2025 before starting monetary easing. This uncertainty has quickly affected Bitcoin, whose price fell below $92,500 before a slight bounce on January 9 to $93,000, marking one of the most significant corrections in several weeks.
The entire cryptocurrency market has suffered the consequences of this movement. Thus, Bitcoin's decline has triggered a domino effect on other cryptocurrencies, amplifying the correction, which once again illustrates the strong correlation between macroeconomic decisions and the risk asset sector. This situation raises questions about the market's ability to recover in the face of an increasingly restrictive economic environment.
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Towards a new correction or an imminent bounce? Although this correction has affected investor confidence, several observers believe it does not call into question the long-term bullish trend. According to John Glover, investment director at Ledn and former Barclays executive, this drop could even be a necessary step before a new push. 'We might test the $90,000 zone before registering a significant move above $126,000,' he states. His analysis is based on Elliott wave theory, a model suggesting that Bitcoin is currently undergoing a fourth corrective wave, potentially signaling a future bullish momentum.
Other technical indicators reinforce this perspective. Rekt Capital, a cryptocurrency analyst followed by many investors, warns about the importance of the $91,000 threshold, which represents significant support to avoid a deeper pullback. In a post on platform X (formerly Twitter) on January 8, 2025, he specifies that 'Bitcoin has lost its support at $101,165 and is again in the range of $91,000 to $101,165.' A bounce at this level could signal the end of the correction phase and initiate a gradual return to higher levels.
Beyond technical analysis, some investors remain confident in Bitcoin's medium-term bullish potential. The projection of a $20 billion increase in global money supply could inject up to $2 billion into the Bitcoin market, which in turn stimulates demand. However, dependence on the Federal Reserve's decisions will continue to dictate the market's pace. If U.S. monetary policy becomes more flexible in the coming months, Bitcoin could regain a more favorable momentum and continue its ascent.
As the market digests this correction, some observers maintain an optimistic view on Bitcoin's development. In the long term, an increase in global money supply and a possible return of institutional flows could stimulate a new growth phase. However, current volatility underscores the greater influence of Federal Reserve decisions on risk assets. If the Fed opts for a prolonged maintenance of its restrictive monetary policy, Bitcoin could remain under pressure. Conversely, an easing of interest rates in the coming months would provide a more favorable context for recovery. In this climate of uncertainty, the market oscillates between consolidation and anticipation of a new peak, suggesting a start to the year under high tension.