The price of Bitcoin fell to a two-month low on January 13, 2025, dropping as low as $89,800 amid growing doubts regarding potential interest rate cuts by the Federal Reserve.
Market response to monetary policy shifts
Bitcoin’s price decline marks its first drop below $90,000 since mid-November and occurs nearly a month after it hit an all-time high of $108,000. The cryptocurrency traded above $100,000 the previous week.
Coinbase’s Head of Institutional Research David Duong told Decrypt that “given the recent employment data, concerns that the Fed may not deliver any cuts in 2025 are putting pressure on assets across the board.” He added that his team remains “cautiously optimistic” about Bitcoin’s performance in the first fiscal quarter, though he acknowledged the path is “unlikely to be a smooth one.”
Financial markets reacted negatively following a report from the Bureau of Labor Statistics indicating that U.S. employers added 256,000 jobs in December, which exceeded economists’ expectations of 160,000 new jobs. This resilience in the labor market has led many analysts to doubt future Fed rate cuts, with BofA Global Research Senior Economist Aditya Bhave stating, “Given a resilient labor market, we now think the Fed cutting cycle is over.”
As of January 13, traders estimated a 30% chance that the Fed would maintain current rates through its December meeting, up from 16% a week prior. A month earlier, the chance that the Fed’s easing campaign had concluded was only 9%.
Lower interest rates typically support risk assets like stocks and cryptocurrencies but can also lead to inflation due to reduced borrowing costs and increased consumer spending. The Fed’s core PCE inflation gauge is set to be released following upcoming meetings, while the Consumer Price Index is projected to show inflation remained flat at 2.7% for the 12 months ending in December.
Rising bond yields have also contributed to pressure on risk assets amidst macroeconomic uncertainties. The yield on the 10-year Treasury bond reached its highest level since October 2023 at 4.799% on January 13.
Technical analysis and market trends
Bitcoin experienced a decline of up to 4.4%, hitting a low of $90,199, which represents the lowest point since November 18, and is significantly below the peak of $108,316 it achieved in December. Other cryptocurrencies similarly faced declines, with Ether dropping 6.6% as of 7:50 a.m. in New York.
Analyst Alex Kuptsikevich from FxPro reported that “the start of the new year has not been easy for the crypto market,” referring to the lack of follow-through on recent price gains which led to increased selling pressure.
Technical analysis by Piotr Matys, a senior FX analyst at InTouch Capital Markets, indicated the formation of a head and shoulders pattern for Bitcoin, suggesting a potential trend reversal from bullish to bearish. The breach below the recent support level of $91,600 is viewed as a “strong technical bearish signal for Bitcoin,” with predictions suggesting the cryptocurrency could fall to around $88,000, and possibly to $74,000 if bearish sentiment continues.
Bitcoin’s price surge in the previous year was influenced by the launch of U.S. exchange-traded funds directly tied to Bitcoin and President-elect Donald Trump’s advocacy for the cryptocurrency sector. However, optimism in the market has diminished in 2025, as analysts believe traders are waiting for clarity following Trump’s inauguration on January 20.
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