Bitcoin Price Primed for Potential Breakout Ahead of January FOMC Meeting, Says Analyst

Bitcoin’s price is set to make a move before the end of January, with the United States Federal Open Market Committee (FOMC) meeting on January 29 acting as a key event, according to Markus Thielen, Head of Research at 10x Research. Thielen predicts that Bitcoin could experience a significant breakout, although the direction of the move remains uncertain.

Narrowing Triangle Signals Imminent Breakout

Thielen noted that Bitcoin is currently trading within a "narrowing triangle," a technical pattern that typically signals an imminent price breakout. This could happen at any moment before the FOMC meeting, but he emphasized that the breakout could go in either direction—upward or downward—from Bitcoin's current level of $96,794.

"From a trading perspective, the best approach is to follow the breakout, regardless of the direction it takes," Thielen explained in his January 14 market report.

CPI Expectations and Potential for Bitcoin Rally

One of the driving factors behind the potential breakout is the market's anticipation of the upcoming Consumer Price Index (CPI) report. With expectations for a higher CPI number, there is the possibility that a cooler-than-expected inflation reading could trigger a rally in Bitcoin prices. A favorable CPI outcome could lead to optimism in riskier assets, including Bitcoin.

The January FOMC meeting marks the first interest rate decision for 2025, making it a critical event for market participants. In December 2024, the Federal Reserve’s hawkish tone caused concern in the broader market, with Fed Chair Jerome Powell signaling that rate cuts may be fewer than initially projected for 2025. This message weighed heavily on risk assets like Bitcoin and cryptocurrency.

Hawkish Fed Stance and Bitcoin's Outlook

According to Bitfinex’s January 13 market report, the Fed's stance in recent months has been one of the most hawkish seen in quite some time. Traders are eyeing the CME FedWatch Tool, which currently shows a 38.3% probability that the Fed will hold rates steady during the first half of 2025. The outcome of the upcoming FOMC meeting, paired with economic data, will likely shape Bitcoin’s price trajectory.

Despite the potential for a breakout, Thielen remains cautious about Bitcoin's price performance in the near term, particularly with the approach of Donald Trump’s presidential inauguration on January 20. Thielen warned that Bitcoin may continue to trade within a narrow range over the next couple of months, citing weak market drivers.

“Due to weak market drivers, Bitcoin will likely remain range-bound until mid-March,” Thielen said.

Historical Precedents and Caution Around Inauguration

Crypto analyst Lark Davis also pointed to historical trends, noting that Bitcoin's behavior before and after presidential inaugurations often follows a pattern. In a January 14 post on X (formerly Twitter), Davis referenced Bitcoin’s price action before Joe Biden’s inauguration in 2021, when Bitcoin dipped to the $30,000 mark before rebounding to $55,000.

“While history may not repeat itself, it often rhymes,” Davis commented, suggesting that similar behavior could unfold again this time around.

Conclusion

With the FOMC meeting just around the corner and various market factors at play, Bitcoin’s price appears poised for a breakout. However, the direction of the move remains uncertain, as the market factors in the latest economic data and political developments. For now, analysts like Thielen remain cautious but vigilant, watching closely for signals from the Fed and other macroeconomic indicators that could drive Bitcoin's next big move.