WHAT IS DRIVING BTC PRICE THIS WEEK?

Keywords

Fed to cut rate twice this year
December job’s report
Institutions adopted BTC in Italy
U.S inflation rate

THE ACCEPTANCE OF BITCOIN IN ITALY BY INSTITUTIONS

Intesa Sanpaolo, Italy's largest bank, made its first Bitcoin purchase, acquiring about €1 million worth, or 11 bitcoins, according to local media and Bloomberg. In an internal email, Niccolò Bardoscia, Director of Digital Asset Trading, confirmed the acquisition, stating, "As of Monday, the 13th of Jan. 2025, Intesa Sanpaolo owns 11 bitcoins. This acquisition marks a significant step for the bank in a country where a proposed increase in the crypto capital gains tax from 26% to 42% stirred controversy. The government later eased the measure, keeping the tax at 26% for 2025. The rate is set to rise to 33% in 2026, down from the originally planned 42%. This institutional adoption and tax reductions provided a modest boost for BTC, hence creating a risk-on sentiment for this riskier asset.

POTENTIAL IMPACT OF THE FED'S TWO TIMES RATE CUTS ON BTC IN 2025

With the Fed now projecting two rate cuts in 2025, down from the previously expected four, markets may interpret this shift with various implications for riskier assets like Bitcoin (BTC). Lower interest rates typically increase market liquidity by making borrowing cheaper, potentially driving more capital into assets such as Bitcoin, thereby boosting its price. Additionally, rate cuts often weaken the U.S. dollar, enhancing Bitcoin's attractiveness as an alternative store of value and increasing demand. Lower rates can also foster a risk-on sentiment, prompting investors to allocate more to alternative assets like cryptocurrencies, further elevating Bitcoin's appeal and value in 2025.
            Meanwhile, many analysts anticipate that favorable cryptocurrency policies under the incoming Donald Trump administration could drive Bitcoin's value so high in coming years.

UPCOMING CATALYST FOR THE WEEK 

The Upcoming U.S. macroeconomic data, particularly the Consumer Price Index (CPI) report set for today, January 15th, 2025, at 5:30 PM GMT+4 (Dubai time), could impact Bitcoin prices. Higher inflation may lead investors to view Bitcoin as a hedge, potentially increasing its value, while lower inflation could reduce demand for such assets.

TECHNICAL VIEW

Earlier this week, on Monday January 13th, 2025, Bitcoin (BTC) dipped to $89,005, finding support on the green trendline and marking its lowest point in nine weeks. This decline came in the wake of U.S. December’s job report, which showed a stronger than expected 256k jobs added, compared to the 164k forecast, and a 0.1% drop in the unemployment rate to 4.01%. The strength of the U.S. dollar over the weekend, along with other fundamental factors, exerted pressure on BTC. However, the cryptocurrency seems to be recovering as market focus shifts to U.S. inflation data scheduled for release later today.
            Currently, BTC is rebounding but facing resistance below $97,750. If inflation rises to 2.9% as forecast or above, BTC could surge targeting $98,571 and potentially reaching $101,994 if the bullish momentum persists in the coming days and weeks as markets awaits Trump 2.0. A retracement, however, cannot be ruled out. On the flip side, if inflation remains sticky, BTC might dip to around $94,641, and if bearish momentum continues, it could tank to $91,110 before testing the support line. Analysts also note that breakouts of these levels remain possible. 

Fig.1 BTCUSD 4H Trading View.