As 2025 approaches, the Bitcoin (CRYPTO:BTC) is navigating a shifting macroeconomic landscape, with fading tailwinds raising concerns about sustained momentum, according to a report.
What happened
The Federal Reserve’s hawkish stance, combined with broader macroeconomic headwinds, suggests a year of greater caution for traders and investors, the report said. 10x Research last Friday.
“Some indicators we have been monitoring suggest that the air is thinning,” the report warns.
This sentiment is gaining ground, with Bitcoin’s recent wedge breakout failure putting its bullish momentum in jeopardy.
Traders are advised to remain vigilant as these technical signals highlight increased risks for the cryptocurrency.
The situation highlights a larger narrative: Bitcoin’s ability to maintain its support level depends on external factors that may no longer be favorable.
One of the most glaring concerns is the diminishing impact of Bitcoin’s aggressive accumulation MicroStrategy (NASDAQ:MSTR).
The company has spent $16 billion to acquire around 159,000 BTC since November.
While this announcement initially sparked optimism, Bitcoin’s price appreciation was modest and MicroStrategy’s stock price remained essentially flat.
“Despite massive buying of $16 billion, Bitcoin’s price gain of around 10% during this period raises questions about the strength of the broader market,” the report reads.
This disparity suggests that even important bullish catalysts may no longer be enough to drive the market higher.
Monetary policy also casts a long shadow on Bitcoin’s 2025 outlook.
The Federal Reserve’s decision to remove its commitment to raise rates at the end of January 2024 initially led to a strong rally.
However, the lack of a clear timeline for the rate cut led to a six-month consolidation phase.
Although Bitcoin rallied again in September following the Fed’s first rate cut, the central bank’s December meeting reintroduced uncertainty.
Analysts point out that the Fed is unlikely to take a dovish stance in early 2025, which could keep Bitcoin in a lackluster trading range.
Inflation data further complicates the picture. Despite the Federal Reserve’s efforts, progress in reducing inflation has been minimal. Bond yields remain elevated, with 2-year Treasury yields at 4.3%.
This persistence creates tighter liquidity conditions, nullifying Treasury measures aimed at reducing refinancing rates.
The Treasury repayment announcement on February 5 next year is expected to provide key insights into the evolution of US borrowing strategies under the new administration.
The next moves
The incoming Treasury Secretary’s potential reversal on confidence in short-term debt could introduce further volatility, raising further concerns for Bitcoin traders.
Market participants are also closely watching inflation reports due Jan. 15, Feb. 12 and beyond.
This data will play a significant role in shaping expectations on Federal Reserve policy, which is considered a key factor in Bitcoin’s performance.
The report highlights the importance of these external forces, noting that Bitcoin’s fate is increasingly tied to macroeconomic trends.
“While we do not wish to be too bearish, it is clear that the tailwinds supporting the market may be fading,” the report concludes.
Analysts are cautious, but this does not mean they are unbalanced on the resistance of Bitcoin, underlining that, although it remains above $95,000, the risk of an increase in volatility and a prolonged consolidation persists.
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