Bitcoin Navigates a Tense Pause Amid Macroeconomic Crosswinds

The new trading week finds Bitcoin in a state of indecisive tension, grappling for clear directional momentum. While the cryptocurrency has stabilized following a sharp weekend sell-off, its recovery remains sluggish. Investor attention is now split between two significant macro risks: the ongoing Federal Reserve policy meeting and the looming threat of a U.S. government shutdown. The key question is how much risk appetite remains in the market ahead of these pivotal events.

Macroeconomic Headwinds Take Center Stage

The immediate uncertainty stems from the macroeconomic landscape. The U.S. Federal Reserve commenced its policy meeting, with an overwhelming market consensus expecting interest rates to remain unchanged this week. Consequently, the focus is less on the decision itself and more on the forward guidance: will the Fed signal a delay to potential rate cuts?

A resilient U.S. economy has already pushed back these expectations. A stronger dollar and higher real yields tend to dampen interest in risk-sensitive assets like cryptocurrencies, as safer alternatives become more attractive. This dynamic explains why Bitcoin has struggled to regain upward momentum despite finding a footing.

Compounding the pressure is the political calendar. A partial U.S. government shutdown threatens to begin on January 31st if no budget agreement is reached. Historically, such situations often trigger a short-term flight to liquidity, which can weigh on speculative assets like BTC until a resolution calms the markets.

Price Action and Technical Perspective

Bitcoin is currently confined to a narrow trading range, oscillating just below the $90,000 level. After sliding to a fresh annual low over the weekend, the digital asset has recouped some losses but remains well below its October peak. It shows a loss of nearly 5% over the past seven days and is slightly negative for the year-to-date period.

From a chart analysis standpoint, the price action suggests a phase of subdued consolidation rather than a definitive break in the broader trend structure. The support zone around $86,000 proved its resilience over the weekend, being defended on multiple occasions. As long as this level holds, market observers do not see the medium-to-long-term bullish scenario fundamentally challenged—even though the distance to the all-time high near $125,000 now stands at roughly 30%.

The Relative Strength Index (RSI) around 38 indicates dampened risk appetite but not yet a clearly oversold condition. Furthermore, the price is trading slightly below the 50-day and more notably below the 100-day moving average, supporting the view of a cooled but not collapsed trend.

Diverging Capital Flows: Institutions Exit, Long-Term Holders Accumulate

A clear pattern has emerged in capital flows: institutional investors are pulling back. Last week, spot Bitcoin ETFs recorded their highest weekly outflows since February 2025, totaling approximately $1.3 billion. These redemptions are considered a primary driver behind the recent price pressure, as they trigger direct sell orders or remove demand from the market.

Should investors sell immediately? Or is it worth buying Bitcoin?

Conversely, on-chain data suggests long-term holders are maintaining or even adding to their positions during dips. Increased buying interest has been observed, particularly below the $87,000 threshold. This implies that short-term, institutional “tourists” are exiting, while dedicated long-term addresses are in accumulation mode.

Network activity presents a mixed but stable picture. Transaction fees have normalized, pointing to solid but not overheated blockchain usage. The ecosystem continues to function without tipping into speculative frenzy.

Regulatory Progress and Product Innovation

Beyond short-term price movements, the institutional infrastructure for crypto assets continues to mature. Reports from Washington indicate progress in negotiations for crypto legislation in the U.S. Senate. A renewed, bipartisan willingness to engage appears to be forming, notably within the Agriculture Committee, which holds jurisdiction over parts of the market structure. For large investors, this kind of regulatory clarity is a crucial lever for expanding or initiating commitments.

In parallel, the range of structured products is growing. The launch of the VanEck Avalanche ETF (VAVX) in the U.S. yesterday—the first of its kind with integrated staking rewards on the Avalanche blockchain—exemplifies this trend. Although not a direct Bitcoin ETF, it signals increasing acceptance of crypto exchange-traded products within the regulated market environment, indirectly strengthening the investment thesis for BTC as a “core asset” within the asset class.

Market Sentiment and Key Levels

Sentiment across crypto markets is tense but not panicked. Gauges like the Crypto Fear & Greed Index reflect a cautious stance, aligning with Bitcoin’s minimal year-to-date gain. In derivatives markets, the use of leverage has declined significantly, potentially reducing the risk of abrupt, forced selling pressure.

Two key technical levels define the immediate landscape:

• Support: The critical zone around $86,000.
• Resistance: The ceiling near $90,000.

A sustained breakout from this range will likely be tied to the Fed’s communication regarding its future policy path. Whether the central bank hints at an extended period of higher rates or signals room for earlier easing could set Bitcoin’s directional course for February.