Despite attempts to recover, the Bitcoin price is still in the grip of bearish sentiment. The lack of decisive demand from US investors and the uncertainty about the Fed’s further moves mean that the market is entering a tedious phase of stabilization that may put the patience of crypto holders to a severe test.
The macroeconomic puzzle where the Fed holds its cards
The latest data from the American economy provided the markets with a solid dose of optimism, although there were some question marks. January labor market reports indicated the addition of 130,000 jobs with a drop in the unemployment rate to 4.30%. These data, combined with inflation slowing to 2.40% per year, suggest that the US economy is more resilient than expected.
However, what is crucial for crypto investors is how the Federal Reserve will react to these numbers. Currently, analysts point to June or July as the most likely dates for the first interest rate cut. Importantly, the strong labor market gives the Fed arguments for maintaining restrictive policy for longer. The chances of no rate changes at the June meeting increased from 27.2% to 33.4% during the week. However, my base scenario assumes at least three cuts this year, which should favor risky assets in the longer term.
Failed breakout and lack of fuel from the USA
A weekend attempt to initiate a relief rally failed. Bitcoin reached the resistance level of USD 71,000, but quickly returned to the USD 68,000 area. Data indicates this move was driven primarily by futures and leveraged long positions, rather than real spot market purchases.
The situation is aggravated by weak demand from the USA, which is confirmed by the negative margin on the Coinbase exchange (so-called Coinbase Premium). When prices on U.S. platforms are lower than on global exchanges, this has historically heralded further downward pressure.
Additionally, ETFs recorded outflows of $360 million last week, showing that institutional capital has temporarily gone into defensive mode.
Temporary surrender or a chance for accumulation?
Analysts suggest that the worst stage of rapid price declines is already behind us. What we are seeing now is the “capitulation of time” phase – a period of boredom, low volatility and frustration that aims to “wear out” indecisive players. Despite this, the first positive signals can be seen beneath the surface:
- Long-term holder (LTH) wallets have started accumulating BTC again.
- The level of open positions (Open Interest) in derivative markets has decreased significantly, which means that the system has been cleared of excessive financial leverage.
- Funding Rates remain flat or negative, suggesting the market is no longer overheated.
It is worth noting that the correlation of cryptocurrencies with the US technology sector remains very strong. The weakness of US bonds and uncertainty around companies from the AI sector may translate into further Bitcoin volatility in the coming days.
What’s next? Key levels to watch
This week, traders’ attention is focused on support around USD 65,000. If this level breaks, the data indicate a risk of a retest of the psychological border of USD 60,000 or even a descent to the low regions of USD 50,000. On the other hand, a sustained break through the $71,000-72,000 barrier could open the door to a quick attack on the $75,000 level. Taking into account the current market climate, the most likely scenario remains the continuation of the sideways trend and searching for a local bottom.
