Cryptocurrency experts are largely united in their belief that Bitcoin‘s BTC/USD long-term bull run remains intact, even as the apex crypto struggles to keep short-term bearish fears away.
Hawkish Fed Threw A Wrench In Bitcoin’s Works
The recent market downturn, according to Bitfinex analysts, is primarily a result of “the Fed reducing the number of cuts in 2025 to two, signaling that it was taking a highly hawkish stance.”
They further noted that it suggests a shift in market dynamics that might not be completely priced in, especially given that the FOMC minutes were released, but the market continues to sell off.
Marcin Kazmierczak, co-founder & COO of Redstone, suggests that while macro conditions are a factor, “It's important to remember that the past year has been wild for the industry—BTC is up nearly 100% YoY—and we haven't seen a significant market downturn in quite a while. Naturally, some market participants are taking profits.”
He also points towards tax season contributing to the sell-offs.
However, Marcin added that structurally, nothing major has changed, and crypto as an asset class still has plenty of tailwinds heading into 2025.
Tom Trowbridge, co-Founder of Fluence, sees the current dip “driven by the Fed’s hawkish stance and possibly a misunderstanding of the DOJ's Bitcoin sales news.”
Still, “any short-term moves we're seeing now will ultimately be irrelevant as other nations follow the U.S.’s lead, causing Bitcoin's price to surge,” Trowbridge emphasizes.
Illia Otychenko, Lead Analyst at CEX.IO, frames the dip within Bitcoin's historical cycles, stating, “Historically, double-digit dips have been a hallmark of post-halving bull runs… Without these types of corrections, the rally’s long-term stability would raise even greater concerns.”
He also highlighted that market had no clear catalyst for a correction — until the Federal Reserve's dot plot revealed updated rate cut projections for 2025.
This revelation fueled bearish sentiment and caused a pullback that was so needed for the market.
Adding a different perspective, James Davies, CEO of Crypto Valley Exchange, suggests the dip isn't US-isolated, saying “it’s not the FED, crypto is global, however it is likely related to the risk off approach everyone is taking as power changes hand in the US.”
Georgii Verbitskii , founder of crypto investor app TYMIO, sums up the current state as caused by “a decrease in USD liquidity, release of negative macroeconomic data, and DOJ's permission to sell bitcoins” while adding, “At the same time, nothing changes in the long-term positive perspective”.
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Inauguration More Likely To Be Bullish, Analysts Say
As the inauguration of President-elect Donald Trump approaches, market sentiment remains divided.
Bitfinex analysts anticipate “increased volatility” and said “The long term value proposition of a pro-Bitcoin stance remains incredibly bullish, more so for altcoins than Bitcoin currently.”
Kazmierczak believes volatility is inevitable, as Trump's inauguration has been a known market event since election day and is likely already priced in.
Trowbridge believes that the first few weeks after the inauguration are likely to bring some positive announcements for crypto.
Otychenko suggests the inauguration “looks like a priced-in event” adding “This difference between expectations and actual actions may lead to some investor disappointment, temporarily limiting upward momentum.”
Davies stated, “Normally we buy the rumour and sell the event. De-Risking is so people can react quickly”.
“The ascendance of Trump will bring more positive news for crypto,” Verbitskii said, adding that his team has been developing plans all this time, and the crypto market will like details as soon as they start announcing them.
Has Bitcoin Topped For This Cycle
Bitfinex analysts believe it is unlikely that the market has topped and that it was an intermediate top, and will be followed by a lengthy pullback.
Kazmierczak puts the probability at 20% and believes crypto as an asset class is structurally strong for the year ahead.
Trowbridge said, “No, I don’t think $108,000 was the top either” and believes “the longer-term bull case for Bitcoin seems solid”. Otychenko places the probability at “less than 5%” stating that it would suggest a capitulation of Bitcoin’s “store of value / hedging camp, which seems unlikely” with 64% of Bitcoin supply remains in the hands of long-term holders.
Davies believes “the market doesn’t think $108,000 was the top, or even close to the potential range in the short to medium term” with the maximum options Vega for March and June above this price point.
Verbitskii stated that probability “tends to zero” and noted a personal forecast of the beginning of February for Bitcoin to reach this price point once again.
"The expected influence of Tramp's presidency would likely drive Bitcoin over its former all-time high,” he added.
While experts agree that the recent downturn is influenced by the Federal Reserve’s hawkish stance and the DOJ’s Bitcoin sales, many believe the long-term outlook remains bullish.
The inauguration of Donald Trump is expected to introduce additional variables and while there may be short-term turbulence, there is a consensus view that the market will ultimately rebound, potentially reaching new highs in the coming months.
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