CoinDesk 20 Index: 3,736.74 -1.4%
Bitcoin (BTC): $3,736.74 -0.15%
Ether (ETH): $3,126.94 -1.53%
S&P 500: 6,067.70 +0.92%
Gold: $2,756.89 -0.12%
Nikkei 225: 39,414.78 +1.02%

Bitcoin registered small gains during the Asian and European mornings to trade above $102,000. It is around 1.2% higher than at 4 p.m. ET on Tuesday and 0.19% lower than 24 hours ago. Attention is focused on the Fed's first FOMC meeting of 2025, with an interest-rate decision due at 2 p.m. ET. However, Wednesday's meeting is largely being seen as a non-event, with policymakers expected to hold rates steady while maintaining the hawkish guidance from December. That meeting saw a 25 basis-point cut, but the accompanying press conference and forecasts signaled slower reductions for 2025, sending risk assets, including bitcoin, lower.

Dogecoin dropped below a short-term uptrend line on Monday, signaling an end to the recovery from December lows and potentially the conclusion of a five-month rally. Since then, prices have dropped below the 38.2% Fibonacci retracement level of the run that started in August and touched highs about 48 cents in December before dropping back. A golden rule of technical analysis says that for a market to maintain its current trend, it must hold above that level. If it fails to do so, the trend is said to have ended. The moving average convergence divergence (MACD) histogram is printing deeper bars below the zero line, another indication of strengthening bearish momentum. Five- and 10-day simple moving averages trend south, hinting at a bearish bias.

Czech National Bank Governor Ales Michl has said that he will present a bitcoin investment plan to the board on Thursday. If approved, the plan could see the bank diversify 5% of its $146.13 billion reserves into the leading cryptocurrency by market value. "For the diversification of our assets, bitcoin seems good," Michl said in an interview with the Financial Times. Michl pointed to broader investor interest in the cryptocurrency since BlackRock and others debuted spot ETFs a year ago. "Bitcoin has significant volatility, which makes it harder to take advantage of its current low correlation with other assets. That’s why I will ask our team on Thursday to further assess Bitcoin’s potential role in our reserves. Nothing more, nothing less," Michl wrote on X.

U.S. M2 money supply increased in December to $21.5 trillion, just shy of its all-time high. An increase in the M2 money supply is a bullish catalyst for risk assets.

M2 supply measures the total amount of money in circulation within an economy, including both liquid and less liquid assets. The CPI tracks the average price change of goods and services over time, which indicates inflation.

Continued growth in the M2 money supply is a bullish indicator for risk assets as it indicates more liquidity is entering the system, which typically finds itself in risk-assets first.

The M2 money supply has clocked in a new monthly high every month since January 2024. The M2 money supply influences CPI by affecting inflation trends. While the Federal Reserve is actively tightening through quantitative easing and keeping the Fed funds rate at an elevated level while trying to bring CPI back down to its 2% inflation target, the M2 money supply continues to grow.

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