BTC Market Outlook: Brace for Heightened Volatility as Markets Adjust to Trump Presidency

If you were looking forward to a quiet Christmas away from your computer, expecting bitcoin to rise steadily through the year-end, forget it.

bitcoin price today live updates: crypto market dips as fed officials hint at slower rate cuts, trump bitcoin plans eyed

Omkar Godbole (All times ET unless indicated otherwise)

If you were looking forward to a quiet Christmas away from your computer, expecting bitcoin to rise steadily through the year-end, forget it. Looks like the Fed has dashed those plans.

First of all, Chair Jerome Powell's comments distancing the central bank from President-elect Donald Trump's potential creation of a strategic bitcoin reserve (CoinDesk) mean traders hoping for one will need some solid reassurance. Many are likely to sit on the sidelines until the new administration makes good on its promises. That will weaken the market's bid side until Trump takes office on Jan. 20.

The second concern revolves around rate projections. Fed officials are anticipating just two rate cuts in 2025, saying they see the benchmark borrowing cost dropping to 3.9% in 12 months' time from the current 4.25%-4.5% range. That is a 50 basis-point upward revision from an earlier forecast of 3.40%.

The market could quickly question a cut to below 4% if incoming data points to sticky inflation and/or labor market strength. This situation has led to concerns that long-end rates, including the 10-year yield, might be too low, according to ING.

Interestingly, the 10-year yield has just broken out of a 14-month downward trend that characterized bitcoin's bull run to over $100,000 from $30,000. A further rise in yields could bolster the already strong while triggering a broader decline in risk assets, including BTC. Bitcoin dipped below $100,000 overnight and dragged the broader market down along with it.

This yield breakout poses particular concerns for ether, often viewed as an "internet bond" with an annualized staking yield of around 3%, weakening the case for a sustained bounce in the ETH-BTC ratio. The continued decline in risk-sensitive assets like the Australian and New Zealand dollars and emerging-market currencies, partly reflecting worries about the Chinese economy, also signals caution.

Still, pullbacks of 20% or more are typical in crypto bull markets, and the overall outlook remains positive.

"Looking ahead, heightened volatility is on the horizon as markets adjust to the expectations surrounding Donald Trump’s presidency. Although short-term turbulence may occur, the long-term outlook for Bitcoin and Ether remains bullish," said Valentin Fournier, an analyst at BRN.

In this uncertain climate, traders might seek refuge in high-yielding crypto assets like Ethena's USDe, which offers returns of around 12%. Pseudonymous analyst OxJeff suggests these pullbacks could present a golden opportunity to invest in tokens linked to AI-powered systems in the blockchain space. Candidates to watch include AI16Z, ZEREBRO, VIRTUAL, MODE, and DOLOS. Stay alert!

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By Shaurya MalwaMemecoins and AI tokens lead Binance users' trading activity

AI tokens are predicted to be the stars of 2025, with nearly 24% of respondents in a survey of 27,000 Binance users saying they'll lead market growth next year. Memecoins are not far behind, with 19% saying they expect them to rise next year. The tokens are fun, popular and currently the most held crypto assets, with 16% of Binance users owning them. That's even more than bitcoin, at 14%.

The survey found that 45% of participants were new to the scene, joining only in 2024 and saying they were "still learning" their way across the market. Over 40% have been around for one to five years. Most aren't betting the farm on crypto, with 44% of respondents having less than 10% of their money exposed to it. Trading, however, is common, with almost a third trading daily.

It is not all fun and games, though. Many respondents said they expect to see more maturity and real-world relevance in the crypto industry in the coming year. A notable 19% of the sample said they expect increased crypto regulations over the next 12 months, and 16% anticipate greater participation from traditional financial institutions and institutional investors. In addition, 17% foresee wider implementation of blockchain technology in real-world applications.

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Source: Farside Investors

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