Basic overview
Bitcoin is now up more than 50% since election day as the bullish trend in the digital currency exploded after Trump's victory. This should not come as a surprise as Trump has vowed to make the US the crypto capital of the planet.
Another bullish driver is the US economy which has not only been doing well but has begun to re-accelerate amid Fed easing and expectations of expansionary fiscal policies such as tax cuts and deregulation.
For now, there is no real top in sight because we would likely have to tighten monetary policy or a certain slowdown in the economy, so buying the dips is the preferred strategy. The risk in 2025 will be inflation and the Fed. If the central bank even mentions the need for some tightening, we could see major corrections in all risk assets.
The Fed is expected to cut today by 25 bps bringing the FFR to 4.25-4.50%. We also get an updated Summary of Economic Projections (SEP) where growth and inflation should be revised upwards, and the Dot Plot is likely to show two rate cuts in 2025. Fed Chairman Powell acknowledged the strength of US data and announced a slowdown in the pace of easing.
This is already priced in as the market expects just two rate cuts in 2025, with the first coming in March at the earliest. Therefore, the market reaction will be driven by deviations from expectations.
Bitcoin Technical Analysis – Daily Timeline
Daily Bitcoin
On the daily chart, we can see that Bitcoin is trading above the key 100K level. From a risk management perspective, customers will have a better risk to reward position around the line of motion
where they will also have the 100K support
for confluence. On the other hand, the sellers will want to see the price break lower to extend the pullback to the 90K price range.
Bitcoin Technical Analysis – 4 Hour Timeframe
Bitcoin 4 hours
On the 4 o'clock chart, we can see more clearly the situation around the transition line and the 100K support area. There has been quite a bit of price action in the past few weeks as the bullish momentum has eased a bit. The catalysts to watch now are today's FOMC decision and inflation data in the coming months. We could see a knee-jerk reaction to today's hawk cut even though it has already brought in the price. Dip buyers could take advantage of that to rally for new highs.
Bitcoin Technical Analysis – 1 Hour Timeframe
Bitcoin 1 hour
On the 1 hour chart, we can see that we have a small support around the highest low at the 103300 level. The sellers will be looking for a lower break to extend the pullback to the 100K support, while ' as the buyers want to see the price break above the counter to target new highs. The red lines define the average daily range for today.
Catalysts to come
Todaywe have the FOMC Policy Decision. Tomorrow, we will get the latest US jobless claims numbers. On Friday, we finish the week with US PCE data.
