Hawkish Rate Cuts by the Fed and Powell's Statement 'No Bitcoin Reserves'... How Low Will Bitcoin Fall? [Kang Min-seung's Trade Now]

"Bitcoin Recovery Expected if it Stably Surpasses $101,000"

"Further Decline Expected if it Falls Below $98,500"

Jerome Powell speaking at the December Federal Open Market Committee (FOMC) press conference. / Photo = Fed website

The U.S. Federal Reserve (Fed) has hinted at significantly slowing the pace of rate cuts starting next year, causing Bitcoin (BTC) to attempt to break through the resistance line near $101,000.

Market experts have analyzed that Bitcoin could continue its recovery if it stably surpasses $101,000, but if it falls below the support line of $98,500, the possibility of further decline increases.

As of 1:09 PM on the 19th, Bitcoin is trading at $101,024 on the Binance USDT market, down 3.11% from the previous day (₩152,090,000 on the Upbit KRW market). At the same time, the Kimchi Premium (the price difference between overseas and domestic exchanges) has recently risen slightly to 3.75%.

U.S. Fed's 'Hawkish Rate Cuts'... "No Bitcoin Reserves"

Fed Chairman Powell. / Photo = Fed website

Recently, the global stock and cryptocurrency markets have declined as the U.S. Federal Reserve (Fed) hinted at slowing the pace of rate cuts next year. Although the Fed cut the benchmark interest rate as expected, the market was shaken by the outlook that future rate policies would be more hawkish (favoring monetary tightening) than anticipated.

On the 18th (local time), the Fed lowered the benchmark interest rate by 0.25 percentage points at the December Federal Open Market Committee (FOMC) and reduced the number of rate cuts next year from four to two through the dot plot containing interest rate forecasts. According to the Fed's Summary of Economic Projections, the benchmark interest rate at the end of next year was revised up from 3.4% to 3.9% annually, as forecasted in September. Fed members expect the rate cut next year to be only 0.5 percentage points.

Fed Chairman Jerome Powell stated at the press conference following the FOMC meeting, "As inflation expectations rise again, the median interest rate forecast has also increased slightly," and "If the economy remains robust and inflation does not continuously rise towards 2%, we can adjust the pace of policy easing more slowly." This explains the possibility of slowing down or reducing the scale of rate cuts.

Meanwhile, Powell also stated that he has no intention of actively engaging in the strategic Bitcoin reserves that the Trump administration plans to pursue. At the press conference, Powell said, "We cannot own Bitcoin." Regarding the legal framework for Bitcoin reserves, he stated, "That is a matter for Congress to consider, and the Fed has no plans to pursue legislative changes."

Photo = Shutterstock

Previously, on the 12th, President-elect Trump confirmed plans for a strategic Bitcoin reserve fund, similar to the U.S. oil reserve fund, in an interview with CNBC, a U.S. economic news channel.

Photo = Chicago Fed Watch capture

Following this FOMC, the interest rate futures market is weighing the possibility of a rate freeze in January next year. According to the Chicago Mercantile Exchange (CME) Fed Watch at 1 PM, there is a 91.4% chance that the Fed will freeze the benchmark interest rate at 0.25 percentage points in January next year. Conversely, the possibility of a rate cut is reflected at 8.6%.

"Crypto Market Sees Increasing Institutional Inflows... Expected to Rise Next Year"

Bitcoin spot ETF fund inflow. / Photo = Farside Investors

The Bitcoin spot exchange-traded fund (ETF) saw a net inflow of $2.167 billion (approximately ₩3.1152 trillion) last week (from the 9th to the 13th). During the same period, a total of $3.2 billion (approximately ₩4.5993 trillion) was net inflowed into digital asset investment products, including Bitcoin ETFs. The recent confirmation of President-elect Trump's plan to pursue a 'strategic Bitcoin reserve fund' and news of MicroStrategy's additional Bitcoin purchases have contributed to the upward trend.

Analysts suggest that Bitcoin has the potential for further gains as institutional demand increases. Global cryptocurrency exchange Bitfinex stated in a research report on the 17th, "The current bull market reflects strong institutional demand for ETF inflows and spot accumulation," and "Various on-chain indicators such as MVRV and NUPL suggest that Bitcoin's 'peak of euphoria' is still far off. The market is likely to peak in the third to fourth quarter of next year, about 450 days after Bitcoin's halving."

The Bitcoin holdings of Bitcoin spot ETFs continue to increase. / Photo = Bitfinex report, CryptoQuant

The report predicts that Bitcoin is likely to continue its upward trend next year. Bitfinex stated, "Bitcoin could rise to $145,000 by mid-next year, and under more favorable conditions, up to $200,000," adding, "(With institutional buying such as ETFs) next year's correction is expected to be minimal. However, investors should not let their guard down against signs of overbuying." The report emphasized that while volatility is expected in the first quarter of next year, Bitcoin is more likely to rise when looking at the broader trend.

Since Trump's victory in the U.S. presidential election, the influence of the U.S. in the cryptocurrency market has been growing. Cryptocurrency data analysis company Kaiko stated in a research report, "U.S. companies are incorporating Bitcoin as a financial asset, and companies like Tesla have also added Bitcoin to their balance sheets," adding, "The U.S. plan to pursue a 'strategic Bitcoin reserve fund' is also gaining attention. This could be a 'game-changer' like the launch of a Bitcoin spot ETF."

In particular, as U.S. companies like MicroStrategy accelerate their Bitcoin purchases, long-term optimism is gaining momentum. Kaiko added, "MicroStrategy holds over 400,000 Bitcoins, with a holding value exceeding $25 billion (approximately ₩35 trillion)," adding, "They plan to increase their Bitcoin holdings to $49 billion in the next few years."

MicroStrategy, known as the company holding the most Bitcoin in the world, currently holds 439,000 BTC, with an average purchase price of $61,725. Recently, several companies, including Nasdaq-listed Semler, Riot, Genius Group, and Japan's Metaplanet, have followed MicroStrategy's strategy and are purchasing additional Bitcoin.

The amount of Bitcoin held by large holders is on the rise. / Photo = Glassnode report

As institutional buying flows in, there are observations that the liquidity of the cryptocurrency market is stabilizing. On-chain cryptocurrency analysis platform Glassnode stated in a weekly report, "Bitcoin's breakthrough of $100,000 is another signal of its resilience and strength," adding, "The Bitcoin held by U.S.-listed Bitcoin spot ETFs has recently exceeded 1.1 million, and as institutions and custody companies hold more, they are providing stable support for market liquidity."

Meanwhile, on social network services (SNS) like X (formerly Twitter) and Reddit, there are increasing posts speculating on the direction of funds concentrated in Bitcoin. Cryptocurrency data analysis firm Santiment analyzed on the 17th, "Recently, there has been active discussion on social media about whether the funds concentrated in Bitcoin will move to altcoins or remain focused on Bitcoin." Investors are responding to altcoin investments by keeping an eye on Bitcoin dominance (the proportion of Bitcoin in the total market capitalization of cryptocurrencies).

"Bitcoin Facing Increased Downward Pressure, Stable Breakthrough of $101,000 Crucial"

Market experts have analyzed that if Bitcoin stably surpasses the $101,000 resistance line, it is likely to continue its upward trend. Conversely, if Bitcoin breaks below $98,500, the decline could widen. On-chain analysts have analyzed that the 'Coinbase Premium,' which indicates U.S.-driven buying, is decreasing, which could slow the upward trend in the medium term.

Bitcoin, which recently hit an all-time high, is giving back some of its gains and undergoing a correction. Ayush Jindal, a researcher at NewsBTC, analyzed, "After reaching an all-time high of $108,297, it showed a sharp decline," adding, "Bitcoin recently gave back $100,000 and is forming a bottom near $98,728, consolidating its losses."

The analyst stated, "If Bitcoin continues to stay above $98,000, it can continue its upward trend," adding, "The main resistance lines for the rise are located at $101,000 and $102,250 in sequence. If it clearly surpasses these, the price can rise further." He continued, "If Bitcoin fails to break through the $101,000 resistance line, it can continue to fall," adding, "The support lines for the decline are located at $98,500-$98,000, $96,200, and $95,500."

Bitcoin is testing the support line as downward pressure increases. Rakesh Upadhyay, a researcher at Cointelegraph, analyzed, "Bitcoin is likely to consolidate in the short term (forming a box range)," adding, "$99,974 is an important support line to watch, and if it falls below this, it could further decline to $98,039." He predicted, "On the other hand, if Bitcoin strongly rebounds near this support line, the possibility of a breakthrough could increase. The upward trend could continue to $113,331 and $125,000."

Christopher Lewis, an analyst at FXPro, also analyzed, "Considering the recent strong buying trend, it would be natural for Bitcoin to take a breather," adding, "Looking at the market's movement, Bitcoin has the potential to rise to $110,000, but it may first fall once. The important support lines will be near $100,000 and $95,000." The analyst added, "There are signals that Bitcoin is approaching the peak within this cycle. Investors need to be cautious."

On the other hand, there is also an analysis that Bitcoin is expected to be bullish in the long term. Katie Stockton, founder of Fairlead Strategies, analyzed, "When analyzing Bitcoin technically, the recent momentum has shifted from 'neutral' to 'bullish,'" adding, "Bitcoin is likely to rise to $124,000." This suggests that Bitcoin could rise approximately 17% more than the current price.

Stockton stated, "Depending on the macroeconomic situation, Bitcoin prices may undergo short-term adjustments, but the long-term outlook remains positive," adding, "As Bitcoin surpassed $108,000 and reached an all-time high, the bullish cycle is likely to continue until the end of the year. Strong momentum continues, so overbuying, which could trigger adjustments, will not act as a major variable."

Kang Min-seung, Bloomingbit reporter minriver@bloomingbit.io