Bitcoin started the week trending downward, dropping below $90,000 after a brief period of optimism saw some investors hopeful for a move toward the illustrious $100,000 mark. However, that optimism dwindled rapidly as market sentiment shifted, and more buyers decided to stay on the sidelines.
In particular, recent geopolitical tensions have further complicated the landscape. Former President Donald Trump announced new tariffs targeting nations that opposed his controversial proposal for US control over Greenland, including a 10% tariff on specific imports. Such developments have introduced unprecedented uncertainty to the financial markets and left many investors in a state of flux.
Adding to the atmosphere of indecision, the Supreme Court held sessions in January regarding presidential authority surrounding tariffs. However, no definitive ruling emerged, leaving the crypto markets in a suspended state as investors awaited clarity. David Dobrovitsky, the CEO of Dobrovitsky Strategic Advisory, noted that the market appears stuck in a narrow trading range, oscillating around $89,000 to $90,000 as both buyers and sellers lack the conviction needed to drive significant price movements.
The liquidity situation remains thin, with momentum weakening across a broader spectrum of cryptocurrencies. Many altcoins have structurally lost value over time, prompting capital to shift toward Bitcoin and a select group of resilient projects, while others continue to suffer from diminishing interest.
ETF Outflows Reflect Institutional Hesitance
On January 21, Bitcoin ETFs experienced outflows amounting to nearly $709 million—marking the largest single-day outflow since November 20, 2024, when the outflows peaked at $903 million. This unsettling trend signals that institutional players are approaching the market with heightened caution, focusing on risk reduction rather than increasing exposure.
Over the preceding weeks, Bitcoin made several attempts to rebound, attempting to breach the $98,000 threshold multiple times. Each effort was thwarted by sellers who quickly intervened. Investors who capitalized on previous dips are now using any rallies to exit at breakeven or with marginal gains, further exacerbating selling pressure.
Market analysts at Glassnode have characterized the current phase as a “moderate bear market.” They highlight the trading activity which oscillates between a support threshold near $81,100 and the average cost basis held by short-term investors. While there is no panic selling, every positive price movement faces resistance from investors who bought in earlier last year.
Inflation Data Offers Mixed Signals
Interestingly, a real-time inflation tracker now indicates that US inflation is at around 1.2%. This metric, derived from the analysis of millions of online prices across various sectors, stands in stark contrast to the official government figure, which hovers at 2.7% and is only updated monthly. The significant discrepancy between these two figures could suggest shifts ahead for financial markets.
Typically, when inflation rates decline, it leads to easier financial conditions over time—though this process is gradual and usually unfolds over weeks or months. This evolution is why Bitcoin has yet to exhibit a strong reaction to the current inflation data.
As of now, Bitcoin languishes around $89,500, with the price remaining relatively stable and showing minimal volatility. The cryptocurrency continues trading within an upward price channel, but any significant movement remains elusive. Currently, Bitcoin would need to increase approximately 2% to hit the $91,200 mark, a level that previously acted as resistance.
In previous cycles, Bitcoin’s price response to changes in inflation data has often been delayed, typically reacting once interest rate expectations have been clarified. For the moment, interest rates are unchanged, and policymakers continue to tread carefully, relying on established inflation metrics rather than real-time indicators.
