A Bloomberg report today indicated that after Bitcoin broke the historical high of $108,000 last night, its momentum has cooled, with traders awaiting the expected interest rate cut from the Federal Reserve. Analysts from K33 Research believe that today's FOMC meeting may lay the groundwork for Bitcoin's momentum during the Christmas holidays. (Background: The voice of the Federal Reserve: The probability of a 25 basis point cut in December is 97.1%! Next year, rate cuts may be paused.) (Supplementary background: Federal Reserve officials support continuing to lower interest rates, and Fed hawks have also indicated: A December rate cut is reasonable.) The Federal Reserve (Fed) is expected to announce its interest rate decision at 3 AM tomorrow (19th), with the market generally predicting that the Fed will cut rates by 25 basis points in December. According to the CME FedWatch tool, the market expects a 95.4% probability of a 25 basis point cut in December, while the probability of keeping the rate unchanged is only 2%. This marks the third consecutive rate cut since the Fed began lowering rates in September, with a cumulative cut of 1 percentage point, bringing the rate to the range of 4.25% to 4.50%. Source: CME FedWatch tool. However, traders currently also predict that the Fed will likely pause rate cuts starting in January next year, with the probability of maintaining the rate in the 4.25% to 4.50% range being nearly 80%, and only a 16.3% chance of another 25 basis point cut, which may not be good news for market liquidity. Source: CME FedWatch tool. Traders are waiting for the expected Fed rate cut. After breaking the historical high of $108,000 last night, Bitcoin began to pull back, possibly because traders are waiting for the anticipated Fed rate cut and assessing the optimism brought by Trump's formal confirmation of election through the electoral college today, as well as his support for cryptocurrencies. BTC reached $108,365 on Tuesday evening; however, it has since fallen to a low of $103,600 by noon today, a drop of nearly 4.4%. At the time of writing, it is reported at $103,933, with a near 24-hour increase narrowing to about 2.4%. Source: OKX. Leading up to the election, Trump unveiled a series of crypto-friendly initiatives, such as creating a favorable regulatory environment to enable the U.S. to lead the cryptocurrency industry and even supporting the establishment of a national strategic reserve for Bitcoin, which has allowed Bitcoin to soar over 59% from around $68,000 at election time due to the 'Trump effect.' This has also seen the stock price of MicroStrategy, the dominant holder of Bitcoin among publicly traded companies, surge, as it is set to be included in the Nasdaq 100 index. The crypto market has become engulfed in a frenzy of optimism. Reports indicate that despite widespread expectations that the Fed will announce another 25 basis point rate cut tomorrow, the strong growth of the U.S. economy and the inflation risks implied by Trump's tax and immigration policy agenda have led to uncertainty regarding the Fed's policy outlook. Further reading: The voice of the Federal Reserve: The probability of a 25 basis point cut in December is 97.1%! Will Bitcoin rise further after the Fed rate cut? K33 Research analysts Vetle Lunde and David Zimmerman wrote in a report: 'We expect this week's FOMC meeting to intensify market volatility. After the meeting, the overall economic situation will experience a few weeks of calm, which may further lay the foundation for Bitcoin's momentum during the Christmas holidays.' 0x Research analyzed yesterday based on trading models, indicating that by January 20, 2025, when Trump takes office, Bitcoin could soar to $120,000, with a probability of 83.33% according to the model. However, some analysts emphasize that 'chasing Bitcoin at current levels should be approached with caution.' Additionally, anonymous experts have indicated to the analysis team that the current BTC price may have already been priced in, as the market had widely anticipated the rate cut earlier, leading to an optimistic sentiment. Under this premise, if the Fed cuts rates as expected tomorrow, the market may see a sell-off due to the exhaustion of bullish sentiment, but it would likely be a small correction. However, there is a very slim chance that the Fed could announce a pause in rate cuts, mainly because some Fed officials have mentioned slowing down the pace of rate cuts or even raising rates to curb inflation, but this sentiment should be a minority view and is unlikely to gain a majority in votes. Nevertheless, if this no-rate-cut situation occurs, it could trigger a significant market drop. Related reports: U.S. unemployment rate boosts the chance of a 25 basis point cut in December! Grayscale predicts: Crypto gains will continue until 2025. Will Bitcoin have a Christmas rally? Analyzing the past 10 years of BTC historical data tells you. Breaking news! Bitcoin breaks through $106,600, analysts optimistic: Trump’s inauguration will surge to $120,000. BlackRock releases a 3-minute Bitcoin informational video: BTC is no longer a radical idea; it has become an emerging global currency alternative. 'Bitcoin falls below $104,000) Tonight, the probability of a Fed rate cut exceeds 95%, but will it pause next year?' This article was originally published by BlockTempo (動區動趨-最具影響力的區塊鏈新聞媒體).

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