Bitcoin Price Plummets as Uncertainty Surrounds Future Interest Rate Cuts

Bitcoin's (CRYPTO: BTC) price has declined nearly 20% year to date, erasing all its gains since President Trump won the election on Nov. 5, 2024.

The decline is attributed to rising interest rates and uncertainty surrounding future rate cuts. However, two catalysts could drive Bitcoin's price back above $100,000.

First, Warsh could stick to his newly dovish stance on inflation and aggressively cut interest rates this year. This would weaken the U.S. dollar, spur a rotation back into riskier assets, and drive more investors to accumulate Bitcoin as a hedge against inflation.

Second, U.S. senators recently drafted a complete regulatory framework for the cryptocurrency market. If signed into law, it would clarify which cryptocurrencies are commodities and allow the crypto-friendly Commodity Futures Trading Commission (CFTC) to regulate the industry rather than the Securities and Exchange Commission (SEC). This clarity could drive institutional investors to increase their Bitcoin holdings through spot-price ETFs.