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Harvey Hunter
Junior Content Creator
Harvey Hunter
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The U.S. Fed rate cuts have bolstered bullish end-of-year projections for Bitcoin, with analysts eyeing a Bitcoin Santa rally poised to send the asset to a $160K valuation.
Most recently, on December 12th, the European Central Bank (ECB) lowered its key interest rates by 25 basis points to 3% in an effort to increase investment and economic activity in the region.
This followed The People’s Bank of China, which cut its benchmark one-year lending rate by 40 basis points to 5.6 % on November 21st, the first rate cut in over two years.
While these events did bolster Bitcoin’s ascent to $100K, the U.S. economy is likely to be the biggest driver of market sentiment towards the end of the year.
The CME Fedwatch tool currently places the odds of a December 0.25% interest rate cut at a decisive 97.1%, up from 82.5% the month prior.
Analysts Set Fed-Fuelled $160,000 Bitcoin Target
The continuation of global monetary policy easing aligns with a recent Maxiport report, which projects Bitcoin reaching $160,000 by 2025.
Interest rate cuts typically drive investors toward risk-on assets like cryptocurrencies, as traditional investments become less appealing, paving the way for significant market gains.
A factor Maxiport anticipates will drive the Bitcoin price into 2025, with “sustained demand for Bitcoin ETFs, the evolution of the macroeconomic environment, and the expanding global liquidity pool.”
This trend is expected to push Bitcoin to what the report describes as a “critical adoption milestone,” surpassing the 8% adoption threshold by 2025.
Maxiport likens this potential milestone to the rapid adoption of mobile phones and social media, which experienced exponential growth driven by network effects and broader accessibility after reaching the 8% mark.
Maxiport also suggests that this adoption milestone will bring greater resilience to Bitcoin, differentiating it from past cycles as crypto “matures.”
“Market dynamics are shifting. Unlike past cycles characterized by sharp 80% drawdowns, Bitcoin’s growing base of dip buyers and institutional support reduces the likelihood of severe corrections,” the report states.
Analysts Caution Bitcoin Santa Rally: Could it Be the Trigger?
This potential 60% rally going into 2025 aligns with the recent Bitcoin ‘Santa rally’ sentiment. In past cycles, the weeks leading up to Christmas and after have consistently led to significant upticks in the Bitcoin price.
This seems credible as Bitcoin appears poised for further gains following a $1.7 billion reduction in leveraged trading positions on December 9th. Crypto.com CEO Kris Marszalek noted that the over-leveraged Bitcoin price needed to be cleaned up for the asset to maintain $100K.
Now, with the potential catalyst that a U.S. rate cut could bring, the next leg of the bull run could be approaching.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
