The recent decision by the Federal Reserve to cut interest rates for the first time in nine months is capturing the attention of investors, particularly those involved in bitcoin (BTC-USD). This action could significantly influence the cryptocurrency’s performance as the year draws to a close. Policymakers have indicated plans for two additional cuts by the end of the year, prompting speculation about where bitcoin’s price might settle by Christmas.
This week, the Fed lowered its benchmark interest rate by 25 basis points, marking the first reduction since December 2024. The current federal funds target range now stands at 4.00%–4.25%. Fed Chair Jerome Powell characterized this move as a precautionary measure in light of rising risks to employment amid persistent inflation concerns. The central bank’s updated projections suggest two more rate cuts of 25 basis points each before year-end, potentially bringing the policy rate down to a range of 3.50%–3.75% as 2025 approaches.
Following the announcement, bitcoin’s price surged past $117,000, signaling a renewed interest from investors. Analysts believe that a balance of short-term volatility and a favorable monetary policy environment could shape the cryptocurrency’s trajectory moving forward. Ryan Lee, chief analyst at crypto exchange Bitget, noted that while the initial reaction to the rate cut was positive, the Fed’s relatively conservative projection of only 50 basis points more in cuts this year may temper bullish sentiment.
Lee emphasized that historical trends suggest that cryptocurrency prices often experience a dip after rate cuts before resuming a bullish trajectory. “Crypto has dipped 5 to 8% following rate cuts,” he mentioned, indicating a potential selling phase in the near term. However, he remains optimistic about the overall macroeconomic landscape, highlighting the shift of capital from lower-yielding money market funds toward digital assets.
Meanwhile, Enmanuel Cardozo, a market analyst at Brickken, shares a similarly bullish outlook, predicting continued upward momentum as the Fed’s rate cuts generally soften the dollar and create favorable conditions for high-risk assets like bitcoin. Cardozo has identified the $118,000 to $120,000 range as a vital resistance level, expressing confidence in potential gains if demand for bitcoin ETFs remains strong.
Some analysts from Bitfinex have underscored the significant influx of funds into U.S. spot bitcoin ETFs, which have drawn over $600 million in a single day before the Fed’s announcement. Although there was a modest outflow following the decision, bitcoin prices held steady, suggesting strong market absorption even during fluctuations.
Looking ahead, Bitfinex analysts foresee a base case of bitcoin reaching between $125,000 and $135,000 as the year concludes, contingent on continued ETF inflows and favorable market conditions. However, they caution that if economic indicators affect the Fed’s projected cuts or if ETF inflows stall, bitcoin could consolidate within a lower range of $110,000 to $115,000.
As the end of the year approaches, analysts appear to favor a bullish sentiment for bitcoin. While volatility remains a reality, many believe that the environment created by the Fed’s policy adjustments will allow for significant price movement. Overall, predictions for bitcoin’s price by Christmas indicate a supportive landscape, potentially leading to targets between $123,000 and as high as $150,000, if the right conditions align.
