Bitcoin's outlook for 2025 suddenly appears uncertain: here are the reasons why.

According to Friday's report from 10x Research, the hawkish stance of the Federal Reserve Board, combined with broader macroeconomic headwinds, suggests heightened caution for traders and investors over the next year.

As 2025 approaches, the report notes that Bitcoin (CRYPTC: BTC) is navigating changing macroeconomic conditions with increasing concerns about sustainability of momentum as tailwinds weaken.
The report warns that "several indicators we are monitoring suggest that the air is thinning."
Due to Bitcoin's recent failed wedge breakout, the bullish momentum is now in jeopardy, and this sentiment is growing larger.
These technical signals highlight the increasing risks of cryptocurrencies, so traders are advised to remain vigilant.
This situation brings to light a broader explanation. Whether Bitcoin can maintain its support level may now be influenced by unfavorable external factors.
One of the most significant concerns is the diminishing impact of MicroStrategy (NASDAQ: MSTR)'s aggressive Bitcoin accumulation.
Since November, the company has spent $16 billion to acquire approximately 159,000 BTC. While this announcement initially sparked optimism, the rise in Bitcoin price has been gradual, and MicroStrategy's stock price has remained mostly stagnant.
"Despite the large $16 billion acquisition, with Bitcoin rising by about 10% during this period, there are doubts about the overall market strength," the report points out.

This discrepancy suggests that even with significant bullish catalysts, it may no longer be sufficient to push the market higher.
Financial policy is also having a significant impact on the outlook for Bitcoin in 2025.
In late January 2024, the Federal Reserve Board (FRB) decided to cancel the promise of rate hikes, initially leading to a strong rebound. However, due to the unclear schedule of rate cuts, it turned into a phase of rate cuts lasting 6 months.
Bitcoin rose again in September following the FRB's first rate cut, but uncertainty resurfaced at the central bank's December meeting.
Analysts point out that the possibility of the FRB taking a dovish stance in early 2025 is low, and there is a potential for Bitcoin trading to remain subdued.

Inflation data further complicates the situation. Despite the efforts of the Federal Reserve Board, progress in inflation reduction has been minimal. Bond yields continue to be high, with the 2-year Treasury yield at 4.3%.
These trends lead to a tightening of liquidity conditions, offsetting the Ministry of Finance's measures aimed at lowering refinancing interest rates.
The announcement of the US Treasury's refunding on February 5 next year is expected to provide important insights into how the US debt strategy will evolve under the new administration.

What's next: The potential for the next Treasury Secretary to reverse dependence on short-term debt could lead to further volatility and heighten concerns among Bitcoin traders.
Market participants are carefully watching the inflation reports scheduled for January 15, February 12, and beyond.
These data points will play a crucial role in shaping expectations for Federal Reserve policy, which is considered a key driver of Bitcoin's performance.
This report points out the increasing connection between the fate of Bitcoin and the macroeconomic trends, emphasizing the importance of these external factors.

"While we do not want to be too bearish, it is clear that the tailwinds supporting the market are weakening," the report concludes.
Analysts are cautious not to deny Bitcoin's resilience, although it is trading above $95,000, they highlight the rising volatility and risks of a prolonged consolidation.

Benzinga · December 20, 2024 20:54