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Bitcoin continues to trade below the $90,000 level, influenced by the cautious market sentiment ahead of the US Federal Reserve’s (FED) upcoming interest rate decision.
According to analysts, investors are avoiding risk-taking due to escalating macroeconomic and political risks, resulting in a noticeable slowdown in the cryptocurrency market.
According to the latest data, Bitcoin is trading around $87,900, down approximately 4 percent on a weekly basis. With the upward momentum from the beginning of January halted, prices have retreated back towards the $80,000 range.
According to Glassnode’s Market Pulse report, while spot trading volumes have leveled off, they remain low, indicating a consolidation phase rather than a strong upward trend.
According to the institution, market conditions in spot, derivatives, and on-chain indicators have become more defensive. Continued selling pressure and increasing hedging demand are exacerbating market fragility. Glassnode analysts state that a sustained recovery is only possible when selling pressure decreases and demand strengthens again.
A similar picture emerges on the institutional investor front. Last week, global crypto ETPs saw outflows of $1.7 billion, while US spot Bitcoin ETFs recorded net outflows for five consecutive days. The withdrawal of over $1.3 billion in total funds coincides with the weakening prices. Bitcoin has fallen more than 10% from its peak of approximately $97,850 in mid-January.
On the macro front, investors are interpreting Bitcoin’s position below $90,000 as a repricing of interest rate expectations rather than a sign of weak demand. Jimmy Xue, co-founder of Axis, emphasizes that the expectation of “high interest rates for a long time” until 2026 has raised the bar for risky assets, and Bitcoin now has to compete with US Treasury bonds offering yields of almost 4 percent.
Geopolitical uncertainties, the renewed risk of a US shutdown, and news regarding trade tariffs are also driving investors towards safe-haven assets like gold and silver. OKX Singapore CEO Gracie Lin notes that the market has become more sensitive to headlines and that Bitcoin may experience volatile and sideways movement in the short term.
On the other hand, market expectations indicate that the Fed will not change its interest rate policy at this meeting. According to CME FedWatch data, the probability of no policy change is at 97 percent. This suggests that Bitcoin’s short-term direction will be determined more by general liquidity conditions and risk appetite than by the Fed’s decision.
*This is not investment advice.
cointelegraph.com
