Market concerns over the Federal Reserve's monetary policy and rising bond yields have negatively impacted Bitcoin's price.
Analysts told Cointelegraph that Bitcoin's recent correction may stem from fears of Fed monetary tightening, which could become a key factor influencing Bitcoin's price trajectory in 2025.
Fed Policy Fears Trigger Bitcoin Price Decline
Data from Cointelegraph Markets Pro shows Bitcoin (BTC) briefly surpassed the psychological $100,000 threshold on January 7—its first breach since December 19—before retreating to $92,500.
Ryan Lee, Chief Analyst at Bitget Research, stated that Bitcoin's pullback to $92,500 primarily reflects growing market anxiety about potential Fed monetary tightening in 2025. He told Cointelegraph:
"Bitcoin's correction stems from strong U.S. economic data hinting at possible rate hikes, reducing crypto's appeal as an investment asset. Simultaneously, signals of Fed policy tightening exacerbated the market adjustment."
As economic recovery signs emerge, expectations for Fed rate cuts have been delayed. CME Group's FedWatch Tool currently estimates a 95.2% probability of unchanged rates at the Fed's January 29 meeting.
CoinGlass data reveals Bitcoin's correction liquidated over $631 million in leveraged long positions in the past 24 hours. Lee added that this large-scale liquidation event may push the market into consolidation as traders reduce leverage.
"The interplay between macroeconomic indicators and crypto market dynamics will remain critical in shaping investor behavior and overall market performance."
👉 Why global liquidity injections could fuel Bitcoin's next rally
Bitcoin May Test $90,000 Before Resuming Upward Trend
Analysts predict Bitcoin could dip below $90,000 before initiating a strong rally toward $126,000. John Glover, Ledn's Chief Investment Officer, noted that while Bitcoin's long-term outlook remains bullish, BTC might need a corrective phase to resolve post-holiday liquidity gaps.
Glover told Cointelegraph:
"This could lead us to retest the $90,000 support before the next significant uptrend. Wave analysis suggests we're completing Wave 4, indicating a potential surge toward the $126,000–$128,000 target range afterward."
Crypto analyst Rekt Capital emphasized on X that Bitcoin must hold above $91,000 support to avoid further downside. Despite this, analysts remain optimistic, with some projecting Bitcoin could surpass $150,000 by late 2025, driven by expectations of a $20 trillion increase in global money supply potentially attracting [$2 trillion into Bitcoin](https://cointelegraph.com/news/bitcoin-2-trillion-investment-2025-liquidity-injections).
👉 How institutional adoption is reshaping Bitcoin's future
FAQs
Why did Bitcoin drop to $92,500?
Bitcoin's decline resulted from market concerns over potential Federal Reserve rate hikes and stronger-than-expected U.S. economic data, reducing risk appetite.
When is the Fed expected to cut rates?
Markets currently anticipate the first rate cut on June 18, 2025, with a 95.2% probability of unchanged rates at the January 29 meeting.
What’s Bitcoin’s next price target?
Analysts suggest Bitcoin may test $90,000 before rallying toward $126,000–$128,000, with long-term projections exceeding $150,000 by late 2025.
How did the Fed’s policy affect crypto markets?
Tighter monetary policy signals diminished crypto's appeal as a speculative asset, triggering liquidations and short-term price corrections.
What drove the $631 million liquidation event?
Bitcoin's price drop forced excessive leveraged long positions to unwind, exacerbating downward pressure.
Can Bitcoin recover from this correction?
Yes, analysts view this as a healthy consolidation phase before renewed bullish momentum, especially with anticipated global liquidity growth.