Bitcoin Price Analysis: BTC Crosses $105,000 Despite Fed Decision To Pause Rate Cuts

Bitcoin (BTC) is trading above $105,000 after rising over 3% following the FOMC meeting and the Federal Reserve’s decision to pause interest rate cuts. 

The upcoming macroeconomic data release set for Thursday could bring considerable volatility to Bitcoin, but analysts expect more room for a price increase. 

Tesla Announces Significant Gain From BTC Holdings 

Tesla has announced a $600 million paper gain from its BTC holdings in the fourth quarter of 2024, thanks to new accounting regulations. The Financial Accounting Standards Board updated guidelines allowing companies to adjust the value of their digital assets at market prices for each quarter. Before the update, companies had to report their digital asset holdings at their lowest valuation at the time of ownership. Even if their value rose, the assets could not be revalued until they were sold, making the company’s digital asset holdings appear weaker than their market value. 

As a result of the updated rules, Tesla’s digital asset holdings surged to $1.07 billion by the end of Q4, a substantial jump from $184 million in previous quarters. Tesla’s numbers coincided with a remarkable surge in the price of BTC, which jumped over 50% in Q4. The surge was driven by several factors, like the re-election of Donald Trump, increased institutional interest in BTC, and spot bitcoin ETFs. BTC is currently trading at around $105,000. Tesla did not disclose its BTC holdings in its Q4 report. However, data from Arkham Intelligence puts Tesla’s holdings at 11,509 BTC, valued at $1.21 billion. This makes Tesla the fourth-largest publicly-traded BTC holder behind MicroStrategy, Marathon Digital, and Galaxy Digital. 

CME To Introduce Bitcoin Options For Retail Traders 

The Chicago Mercantile Exchange (CME) Group has announced plans to introduce options related to its bite-sized Bitcoin Friday futures to cater to growing interest from retail investors in crypto derivatives. The cash-settled options will begin trading on February 24, subject to regulatory approval. The options will complement CME’s current offerings and include physically settled options on BTC and ETH futures. According to CME’s global head of crypto products, Giovanni Vicioso, the new options will offer traders greater precision in managing short-term Bitcoin price risks, adding that the smaller contract size and daily expiries will provide an efficient way for traders to manage their BTC exposure. 

CME launched Bitcoin Friday futures on September 29. They are smaller than other retail-focused Bitcoin futures products, with each contract representing 1/50th of a Bitcoin. They are even smaller than Coinbase’s nano Bitcoin futures, sold in increments of one-100th of a Bitcoin. Bitcoin Friday futures have registered considerable trading activity since their introduction, with over 775,000 contracts traded at an average daily volume of 9,700 contracts. 

Bitcoin (BTC) Price Analysis 

Bitcoin (BTC) is hovering around $105,000 despite the Federal Reserve’s decision to pause interest rate cuts. Investors are now waiting for the upcoming US Gross Domestic Product (GDP) for Q4 2024, set to release on Thursday. Analysts expect considerable volatility in the BTC price following the release of these numbers. Gracy Chen, CEO of Bitget, stated, 

“Immediate growth, as we’ve seen in previous bull cycles, may not follow as much of the optimism surrounding Trump’s stance on crypto has already been priced in following recent bullish trends.”

Markets expected the Fed to keep interest rates unchanged, adopting a hawkish stance after acknowledging that inflation had not eased on expected lines. The Fed’s monetary policy statement highlighted a resilient labor market and stated that risks to its dual mandate goals are “roughly in balance.” Fed Chair Jerome Powell said that while inflation has eased, it remains at 2.9%, making further adjustments uncertain. US Treasury yields rose 4.5 basis points to 4.581% following the announcement, while the US Dollar Index climbed to a session high of 108.10. However, the Fed’s decision to pause interest rate cuts could indicate a bearish outlook for the crypto market. 

BTC registered a substantial decline at the beginning of the week after facing volatility the week prior. Volatility set in on Thursday after the flagship cryptocurrency registered a substantial drop a day prior. BTC rose to an intraday high of $106,903 and fell to an intraday low of $101,296 before settling at $104,004. Buyers retained control on Friday as BTC rose to an intraday high of $107,038 before settling at $14,874. However, sentiment began changing over the weekend as BTC registered a marginal drop on Saturday before falling over 2% on Sunday to settle at $102,655.

Source: TradingView

Selling pressure intensified on Monday as BTC dropped to an intraday low of $97,766. However, the price recovered from this level to reclaim $100,000, ultimately settling at $102,064. Buyers retained control on Tuesday, and BTC fell 0.69% to $101,362. BTC made a strong recovery on Wednesday, rising 2.27% to $103,666. BTC has crossed $105,000 during the ongoing session, up nearly 2% and trading around $105,51. Sentiment around BTC has picked up since Wednesday. The RSI currently sits at 61, well above the neutral zone. The MACD has also flipped to bullish, indicating an uptick in positive sentiment. If BTC remains above $105,000, buyers will look to push to $110,000. On the other hand, if sellers retake control and drive the price below $100,000, BTC could decline to $90,000.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.