Bitcoin gave investors an early Christmas gift on Christmas Eve (24th), starting a rapid rise from around 8:45 PM. It broke through multiple resistance levels, reaching a peak of $99,480 at midnight. As of writing, it has slightly retreated to $98,405, with a near 5% increase over the last 24 hours.

Ethereum also briefly surpassed $3,500, and SOL climbed above $200, with most major altcoins rallying on Bitcoin's support.

Market Getting Panic

The recent declines were mainly due to the Federal Reserve (Fed) announcing a 25 basis point rate cut on December 19, suggesting a slower pace of rate reductions in 2025, with only two cuts of 25 basis points each expected, down from four anticipated in September, leading to volatility in both the stock and cryptocurrency markets.

BCA Research: Fed's Rate Cuts in 2016 Will Exceed 50 Basis Points

There's growing analysis suggesting that the Fed might increase the scale of rate cuts next year if inflation is controlled. BCA Research recently released a report stating that they believe the actual rate cuts by the Fed in 2025 will exceed the 50 basis points projected by officials at this month's FOMC meeting.

BCA Research first highlighted that after the Fed's rate cut announcement this month, the November Personal Consumption Expenditures Price Index (PCE) released by the U.S. Department of Commerce brought good news, with the PCE index falling below market expectations. If this trend continues into 2025, the Fed might implement rate cuts exceeding 50 basis points:

"The core PCE index, the Fed's preferred inflation gauge, if it stays at a three-month average, inflation would indeed reach 2.5% by March next year; if it maintains a six-month average, it would reach 2.5% by February. This suggests that inflation could meet or even fall below the Fed's projections sooner than expected."

Additionally, BCA Research noted that the labor market is losing momentum, with the unemployment rate rising from a cyclical low of 3.4% to 4.2%. Thus, the Fed's prediction of controlling unemployment at 4.3% by year-end is questionable. BCA Research believes that with little significant improvement in the labor market, the Fed might increase the magnitude of rate cuts next year.

Lastly, BCA Research analyzed the potential economic impact of tariffs that Trump might implement if he takes office next year, suggesting that tariffs could lead to a temporary inflation spike, and pressures on manufacturing might force the Fed to accelerate rate cuts in the latter half of 2025