Bitcoin Holds Strong Amid Equity Turmoil Over Fed’s 2025 Rate Cut Outlook: Report

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As a seasoned researcher with over a decade of experience in financial markets and cryptocurrencies, I find myself intrigued by the recent developments in both traditional equities and Bitcoin (BTC). The FOMC’s decision to slow down on interest rate cuts has sent ripples through global markets, causing a slight downturn in equity indices while BTC remains relatively steady.

The past year has been a rollercoaster ride for investors, with the Fed’s policy shifts driving market movements more than ever before. The current situation reminds me of a classic game of chess – just when you think you have your opponent figured out, they change their strategy and throw you off balance.

The correlation between Bitcoin and tech-heavy equity markets is worth noting, as it hints at the growing maturity of cryptocurrencies as an asset class. However, I’m not entirely convinced that this correlation will persist in the long run. Bitcoin has always been unpredictable, much like a joker in a deck – you never know when it might pull off a surprise move.

In terms of predictions, I’m cautiously optimistic about BTC’s long-term outlook. As for the short term, crypto entrepreneur Arthur Hayes’ forecast of a “harrowing dump” around Trump’s inauguration is an interesting perspective, but I wouldn’t bet my life savings on it just yet. After all, even the best of us can be wrong sometimes – like when I thought I could outsmart my cat during our game of fetch. Spoiler alert: he won.

In conclusion, while the markets are bracing for potential inflation under Trump, we must remember that cryptocurrencies, especially Bitcoin, have a unique ability to defy traditional market trends and carve their own path. So buckle up, folks – it’s going to be a wild ride!

After the Federal Open Market Committee (FOMC) meeting on December 18, many global stock market indexes have seen a minor dip. Interestingly, despite this trend, Bitcoin (BTC) has remained relatively stable and was trading around $90,000 at the time of this writing.

Bitcoin Steady Amid Speculations Of Slower Interest Rate Cuts

As a researcher, I’ve noticed that after more than a year of uninterrupted interest rate increases by the US Federal Reserve (Fed), they initiated a series of rate cuts starting from September, lowering rates by 50 basis points. This move instilled optimism in both the cryptocurrency and equity markets, causing them to surge in expectation of a more accommodative monetary policy that seems to favor riskier assets.

Based on K33 Research’s report, the December 18 FOMC meeting raised some questions about continuous rate cuts, as Chair Jerome Powell suggested a more gradual pace of monetary easing in 2025. This cautious approach to interest rate reductions by the Fed is largely driven by concerns about potential inflation linked to President Trump’s administration.

Consequently, the S&P 500, a market index measuring the performance of 500 significant U.S. companies listed on stock exchanges, has experienced a decrease of 2.55% over the last month. Surprisingly, amid this decline in stocks, Bitcoin has demonstrated strength, indicating its emerging role as a distinct asset class.

Regarding the recent market fluctuations, Vetle Lunde, Chief Researcher at K33 Research, stated that the Federal Open Market Committee (FOMC) meeting on December 18 served as a trigger for this decline. In addition, he mentioned:

Over the last fortnight post the FOMC meeting, I’ve observed a global trend towards risk reduction, which has significantly impacted both Bitcoin and Ether. Specifically, Bitcoin saw a 11% drop in value over this period, whereas Ether declined by a more substantial 15%. This downward trend has caused the Ethereum to Bitcoin ratio (ETH/BTC) to approach 0.036.

Despite a 11% decrease in Bitcoin’s price being substantial, it is rather small when considering its past trends. In the course of Bitcoin’s bull markets, drops between 20% and 30% are frequently observed for the leading cryptocurrency. On the other hand, altcoins often endure even steeper declines before they rebound.

Lunde pointed out that the connection between Bitcoin and the Nasdaq, as measured over a 30-day period, has surpassed 0.5 for the first time since September. This significant increase in correlation implies that Bitcoin is starting to reflect the trends of conventional technology-focused stock markets more closely.

Market Braces For Inflation Under Trump

Regardless of the Federal Reserve reducing interest rates by 100 basis points since September, financial markets continue to express apprehension over prolonged inflation. This unease can be seen in the increase of 100 basis points in the 10-year Treasury bond yield.

Based on recent drops in Bitcoin’s price, crypto entrepreneur Arthur Hayes predicts a potential “dramatic plunge” for the leading cryptocurrency around President Trump’s inauguration. Additionally, analysis of on-chain data points towards a possible steep drop to approximately $80,000 for Bitcoin.

Experts in various industries continue to believe that Bitcoin’s optimistic future perspective stays strong. Currently, Bitcoin is being exchanged for approximately $94,805, marking a 2.6% increase over the previous day.

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2025-01-01 06:42