The price of bitcoin exhibited slight stability today following a tumultuous weekend that saw it plummet to $86,000. By mid-afternoon, the cryptocurrency recovered about 1%, reaching approximately $87,850 after initially bottoming out earlier in the session. The market remained highly volatile, with traders exhibiting caution in light of recent selloffs and ongoing uncertainty surrounding Federal Reserve policies.
With the central bank’s pivotal policy meeting scheduled for Wednesday, attention is heightened. Analysts largely expect the Federal Reserve to maintain interest rates within the 3.50% to 3.75% range. However, the meeting has gained considerable scrutiny due to rising tensions over the Fed’s independence, particularly following President Trump’s administration’s recent threats of a criminal investigation into Fed Chair Jerome Powell concerning a significant renovation project.
These developments unfold amid Trump’s attempts to reshape the Fed’s leadership as Powell’s term nears its end. Legal challenges, including a Supreme Court case regarding Trump’s authority to dismiss a Fed governor, have further intensified discussions about the central bank’s operational independence from political influence.
The cryptocurrency market grapples with the ramifications of forced liquidations and ongoing selloffs, particularly affecting leveraged positions. Moreover, U.S.-listed spot bitcoin exchange-traded funds have contributed to the downward pressure, with recent data revealing $1.33 billion in net outflows for the week ending January 23. This marks the largest weekly outflow in nearly a year, compelling additional selling amidst already fragile market conditions.
Despite ongoing corporate bitcoin accumulation efforts failing to buoy sentiment, some companies, such as Strategy., have made significant investments in bitcoin. The software firm recently announced acquisitions of 2,932 bitcoin for approximately $264.1 million from January 20-25, averaging $90,061 per coin. Yet, these purchases did little to improve bitcoin’s price stability, with Strategy. now holding a total of 712,647 bitcoin at an aggregate purchase price near $54.2 billion.
Recent analysis from Bitcoin Magazine highlights a sharp bearish reversal, indicating that the bitcoin price dropped significantly last week and closed near $86,588 after struggling to maintain momentum above the $98,000 resistance level. This decline represents a critical loss of the $87,000 support, shifting market control back to sellers. Analysts point to the $84,000 level as crucial; if bitcoin closes below this support, it may face increased downward pressure, potentially heading toward the $72,000–$68,000 range. Significant defense of the $84,000 level by bulls is deemed essential to prevent further degradation.
To restore stability, buyers would need to reclaim $88,000, while additional resistance levels are identified at $91,400 and $94,000. The $98,000 ceiling remains a formidable barrier that is unlikely to be breached in the near future, although a breakout could pave the way toward $103,500. Technical indicators further emphasize a bearish sentiment, with the price closing below the 100-week simple moving average and the MACD remaining in negative territory. The relative strength index has also turned downward, reflecting prevailing bearish sentiments.
Adding to the overall sense of unease, the Bitcoin Fear and Greed Index currently sits at 20 out of 100, signaling extreme fear among market participants. This sentiment often corresponds with heightened uncertainty and can occasionally present buying opportunities as prices dip below perceived value. At present, bitcoin is trading at $87,698, representing a 1% decrease from its 7-day all-time high of $88,635 and a mere 2% above its 7-day low of $86,126.
