Bitcoin Under Pressure: Goldman Trims Fed Rate Cut Expectations, BofA Sees Potential Hike After Blowout Jobs Report

Bitcoin, the world's leading cryptocurrency, is facing headwinds as Goldman Sachs trims its expectations for Federal Reserve rate cuts and Bank of America (BofA) predicts a potential hike following a strong jobs report. The crypto market, which had gained 11% in early 2025, is now down over 5%, with Bitcoin, Ethereum, XRP, and Solana all seeing steep declines.



Goldman Sachs, in a note to clients, now expects the Fed to cut just twice in 2025, with another rate cut in June 2026. This shift in expectations comes after the December jobs report showed a stronger-than-expected increase in nonfarm payrolls, dampening hopes for monetary easing. The report also saw the unemployment rate drop to 4.1%, further reducing the likelihood of rate cuts.

Bank of America, on the other hand, fears an extended pause in the Fed's rate-cutting cycle, with risks skewed in favor of a rate hike or renewed tightening. ING also believes that the market is right to see the risk of an extended pause from the Fed, given the recent economic reports.



The strong labor market dampens hopes for monetary easing, signaling less urgency for rate cuts. This aligns with the CME FedWatch tool's projection of a 95% chance that the Federal Reserve will hold rates steady at its January 29 meeting. Amid this data, the crypto market reacted to the downside, resulting in over $400 million in liquidations, according to Coinglass data.

Bitcoin's price fell over 5% since reaching a high of over $102,000 on Monday, pushing the asset to the $96.5K mark. This decline raised questions about Bitcoin's safe-haven status and its ability to weather market uncertainty. Traders are now watching how President Trump's pro-crypto stance might affect market sentiment, though the impact of potential regulatory changes remains uncertain.



In conclusion, changes in Fed rate cut expectations can significantly impact Bitcoin's price trajectory. Strong economic data, such as the December 2024 jobs report, can lead to reduced rate cut expectations, which may negatively impact Bitcoin's price. Conversely, optimistic regulatory expectations can drive Bitcoin's price higher. However, Bitcoin's decentralized nature and potential as a hedge against inflation or a store of value may continue to attract investors, despite changes in interest rates and market sentiment.