Bitcoin Eyes $130K Amid Fed Decision and Pro-crypto Policies

On December 17, Bitcoin (BTC-USD) hit an all-time high of $108,230, up 2.3% in just 24 hours. Analysts attribute this sharp rise to the possible start of the traditional Santa Claus rally, which is usually observed in financial markets in mid-December. This rally could continue in January, setting the stage for a New Year’s market rally.

The crypto market is focused on key economic events, including the Federal Reserve’s FOMC meeting scheduled for December 18. The CME FedWatch tool shows a 96% chance of a 0.25% cut in the benchmark interest rate.


However, since this cut is already priced in, investors will focus on the upcoming speech by Fed Chairman Jerome Powell. Pauline Shangett, CMO of ChangeNOW crypto exchange predicts that after the meeting, Bitcoin could rise to $112,000, reaching $130,000 in January 2025.

“Bitcoin has reached a new all-time high, fueled by a gap-up in the U.S. future indexes and increased holiday optimism. As investors anticipate a strong end-of-year market rally, all eyes are on the upcoming FOMC meeting on December 18, where a 0.25% rate cut is expected with a 96% probability. This rate cut could drive Bitcoin above $110,000 post-meeting and potentially to $120,000 by January 2025. Despite minor price corrections, traders are eager to invest in Bitcoin, eyeing its potential role as a reserve asset. The expected easing of monetary policy and favorable regulatory signals, alongside Bitcoin’s growing dominance in the crypto market, indicate a robust bullish trend likely to continue as the year concludes.”

Supportive factors for the crypto market continue to come from the United States. The Biden administration has appointed several cryptocurrency supporters to key positions, including the Secretary of the Treasury and the Chairman of the SEC, creating a favorable regulatory environment. In addition, reports of the Trump family increasing their holdings in Ethereum, AAVE and Chainlink are also bolstering market optimism.

Broad market momentum also confirms the uptrend. On December 16, ETH rose 4%, approaching $4,000, and the CoinDesk 20 Index, which tracks top cryptocurrencies, showed a 4% gain. While crypto stocks Coinbase (NASDAQ:COIN) and MicroStrategy remained relatively flat, it’s worth noting that MicroStrategy is set to join the Nasdaq 100 Index and the QQQ ETF later this month, further integrating cryptocurrencies into traditional financial instruments.

Marko Ratkovic, the CTO at Graphite Network, attributes the start of the new bullish phase to the traditional Santa Claus rally. This phenomenon typically occurs in the second half of December and may transition into a New Year’s rally in January.

“The market is anticipating a new all-time high for Bitcoin, reaching $130,000 ahead of the Christmas holidays. The Federal Reserve's decisions, easing cryptocurrency regulations, and the continued growth of interest from institutional and retail investors significantly influence the growth rate. As a result, it may not take long to reach the $130,000 mark. While maintaining an optimistic outlook, it is essential to approach investment decisions carefully, keeping in mind the risks inherent to the cryptocurrency market.”

In addition, the current dynamics of Bitcoin growth coincides with the rally of the Nasdaq Composite, which ended the previous trading week with an increase of 0.3%. Lower interest rates usually weaken the dollar and increase liquidity, which in turn supports the price of Bitcoin. Over the past month, Bitcoin has grown by almost 8%, and since the US presidential election, it has shown a 50% increase. Against this background, Bitcoin confidently holds above the $106,000 mark, accounting for 52.9% of the total capitalization of the cryptocurrency market. Matrixport experts believe that a favorable macroeconomic environment may become one of the drivers of the growth of the first cryptocurrency to $160,000 in 2025.

At the same time, annual inflation in the United States in November was 2.7%, which coincided with market expectations, but ECB head Christine Lagarde has so far refrained from making statements about a victory over inflation in the eurozone. Technical and macroeconomic factors also point to a continuation of the bullish trend. Bitcoindata21 analysts suggest that Bitcoin could reach $140,000 by early January, based on indicators such as the Pi Cycle Indicator and historical trends. Cryptocurrency market platforms are reporting record high open interest in Bitcoin futures, indicating an active market and potential for high volatility.

Bitfinex Head of Derivatives Jag Kooner attributes Bitcoin’s stability at $100,000 to investors’ growing appetite for risk assets. In his opinion, the recent wave of liquidations in the derivatives market, which cleared it of over-leveraged positions, has created a healthy foundation for a new leg of growth in the coming weeks.

“If macroeconomic conditions, such as rate cuts and institutional adoption, remain favorable, Bitcoin could finish the year at record-breaking levels.”

Upcoming economic reports, including U.S. retail sales on December 17 and consumer spending data (PCE) on December 20, could further impact trader sentiment. Given the expected volatility, it is recommended to keep a close eye on these numbers.

As the end of the year approaches, Bitcoin’s success demonstrates its growing role as a global financial asset. The combination of a favorable macroeconomic environment, evolving regulatory policies, and strong investor interest points to a possible new phase of growth for the cryptocurrency.