Analysts say Bitcoin could see a rally towards $200,000 in 2025, as markets anticipate key US inflation data and institutional capital inflows drive momentum.

The December Consumer Price Index (CPI) is scheduled to be released at 8:30 a.m. EST on Wednesday, and is expected to show a 2.9% annual increase and a 0.3% monthly rise, according to MarketWatch. Data.

The core CPI, which excludes food and energy, is expected to grow 0.3% on a monthly basis.

Expected CPI data is crucial to understanding inflation trends and how they could impact the Federal Reserve's monetary policy.

Lower or stable inflation could prompt the Fed to ease its aggressive stance of raising interest rates for a longer period, reinforcing a favorable risk environment for assets like Bitcoin.

If inflation moderates in line with expectations, this could enhance Bitcoin's appeal by signaling increased liquidity in financial markets through potential interest rate cuts, making risk assets more attractive to institutional and retail investors.

Conversely, continued high inflation rates may delay monetary easing, dampening Bitcoin's upward trajectory. As of January 15, 2025, data were obtained from CME FedWatch tool It indicates that traders are divided on the path of the Fed's interest rate cuts for this year.

“The producer price index came in lower than expected, although it was still rising; it rose less than expected,” said Ryan McMillen, chief investment officer at cryptocurrency fund manager MerkleTree Capital. Decryption.

“We could see the same thing for the CPI on Wednesday. This would indicate that the dollar has likely topped out, and riskier assets will get some relief.”

This is in line with the Trump government's assertion this week and increasing comments from his team about plans to weaken the dollar and lower interest rates — not just short-term interest rates but also longer-term interest rates such as 10-year Treasuries, which have been rising. McMillen added that despite the Fed rate cuts.

“It may take some time for the stock markets to calm down, but it looks like bitcoin and cryptocurrencies will rise more immediately as the Trump team officially announces its pro-bitcoin and crypto stance,” he said.

While some expect up to two 25 basis point cuts, in line with the Federal Reserve's recent guidance, a significant portion of traders now believe there may be no rate cuts at all in 2025.

Recent strength in the US labor market, with an unexpected 256,000 job gain in December, has raised concerns about inflation remaining above the Fed's 2% target, which could delay further easing and create uncertainty over risk assets. , including cryptocurrencies.

Bullish year ahead?

Regardless of interest rate cuts, some still expect more growth in the final leg of the rally this year.

In its latest weekly report, CryptoQuant highlighted the potential for Bitcoin to rise between $145,000 and $249,000 by the end of the year, supported by favorable macroeconomic trends, pro-crypto American administration and historical patterns.

The report also points to growing institutional adoption, with addresses holding between 100 and 1,000 Bitcoin, adding $127 billion in 2024.

“Bitcoin is entering the final year of its four-year cycle, a historic period of significant price increases,” CryptoQuant wrote. Historical trends suggest that capital flows into Bitcoin could reach $520 billion in 2025, building on $440 billion since late 2022.

With a market cap to realized value ratio of 2.3, Bitcoin remains well below the overheated zone of 3.8-4.0, indicating room for further growth. This ratio compares Bitcoin's market value with its realized value, which helps identify overbought or oversold conditions.

Risks include a potential “news sell” event linked to the US administration’s pro-crypto policies and weak retail participation, which could dampen momentum.

Meanwhile, CryptoQuant warned that Wednesday's CPI data could significantly impact market sentiment, with deviations from expectations potentially impacting the Fed's interest rate path and Bitcoin's path.