Check out our expert analysis of the SEC’s next move and how it will affect the future of XRP here.
Bitcoin struggles amid Fed concerns
Meanwhile, Bitcoin (BTC) extended its losing streak amid concerns that the Fed’s interest rate policy may become more hawkish. The Fed concerns contributed to BTC falling from its all-time high of $108,231 on December 17th.
This week’s US labor market and services sector data reflected a strong US economy, denting hopes for a Fed rate cut in the first half of 2025. BTC reacted to this, falling from a high of $102,668 on January 7th to a low of $91.298 on January 9th.
Friday’s US jobs report could determine the Fed’s short-term interest rate path and the trajectory of BTC price. Rising average hourly wages and a falling unemployment rate could delay the Fed’s interest rate cuts beyond May. A prolonged period of high Fed interest rates could impact riskier assets. However, slower wage growth and rising unemployment are increasing demand for riskier assets.
US BTC spot ETF market trends reflect uncertain market conditions
US employment statistics may also influence the trend of US BTC spot ETF market flows. On January 8, the US BTC spot ETF market reported net outflows of $568.8 million, reflecting sentiment on the Fed’s interest rate path. The outflow contributed to BTC’s recent decline.
Beyond the US economic calendar, news from Capitol Hill could also impact demand for BTC Spot ETFs.
On January 9, FOX Business journalist Eleanor Tellet shared the news that the U.S. Senate Banking Committee is planning to launch a subcommittee on digital assets, stating:
“This move is seen as a commitment by Banking Committee Chairman Tim Scott to prioritize advancing crypto legislation and policy.”
Cryptocurrency advocate Sen. Cynthia Lummis is reportedly running for chair of the subcommittee. In 2024, Senator Lummis introduced the Bitcoin Act, proposing that the US government acquire 1 million BTC over five years to address the national debt crisis.
Her appointment could pave the way for a Strategic Bitcoin Reserve (SBR), which could definitely tip the balance of supply and demand in favor of BTC. Congress, the Federal Reserve, the Treasury, and the President must approve BTC as a strategic reserve asset.
Progress towards SBR could drive US BTC spot ETF and BTC demand to new highs. Amicus curiae attorney John E. Deaton recently commented on the potential impact of SBR on BTC price trends, stating:
“If the United States Government (USG) passes Sen. Lummis’ bill and starts buying BTC, I have no doubt that other countries will follow suit, just like they did with gold. It could literally create FOMO for nation states. Yes, and if that happens, $1 million per BTC will happen much faster than people think.
Bitcoin price outlook
On Thursday, January 9th, BTC fell 2.53% to close at $92,710, following Wednesday’s 1.96% decline. Importantly, BTC stabilized after falling below $92,000 for the first time since December 30th.
BTC’s short-term trends are determined by US employment statistics, BTC Spot ETF market flow trends, and Strategic Bitcoin Reserve (SBR) trends.
Tighter U.S. labor market conditions could dampen expectations that the Fed will cut interest rates in the first half of 2025. If the Fed becomes more hawkish, BTC could fall below the $90,742 support level. Conversely, rising unemployment and slowing wage growth could reignite bets on the Fed rate in March, pushing BTC towards an all-time high of $108,231.
However, progress towards US SBR could be crucial for BTC to break new ground.
