Bitcoin’s ‘Bottoming Phase’ Ends: Five Key Things to Watch This Week

• Bitcoin struggles with precarious positioning amidst macroeconomic volatility, closing the week below key support and setting the stage for potential further declines.

• The upcoming Federal Reserve interest rate meeting promises to stir additional market turbulence, with traders wary of global economic factors.

• Despite gold and silver reaching record highs, crypto continues to languish, sparking discussions over Bitcoin's valuation compared to other assets.

Bitcoin Faces New Lows Amid Market Volatility

As February approaches, Bitcoin finds itself in troubling waters, navigating macroeconomic upheavals that threaten to drive its price further down. Currently trading at $86,000 following Sunday’s weekly close, Bitcoin sits below crucial support levels, setting a bearish tone for the upcoming week. Traders, analysts, and entrepreneurs like Michaël van de Poppe highlight the multifaceted volatility affecting Bitcoin, the forex, commodities, and bond markets. In the face of uncertainty, van de Poppe characterizes the market condition as a "generational opportunity."

After dipping under $86,500, Bitcoin needs a strong move to avert further declines, as Keith Alan from Material Indicators warns. A close below annual open values near $87,500 may well set a stage for deeper losses. Recent data from CoinGlass shows significant liquidations, indicating a high-stakes environment as the risk of a U.S. government shutdown looms.

Federal Reserve's Meeting Casts Shadows

This week, market watchers will focus keenly on the Federal Open Market Committee (FOMC) meeting. Although expectations suggest no change in interest rates, several facets, including Japan's economic struggles and ongoing trade tensions, draw attention. Reporting tensions between Federal Reserve Chair Jerome Powell and President Donald Trump add another layer of complexity, as Trump's plans for a successor solidify. Meanwhile, major economic indicators betray mixed signals, suggesting that while U.S. stocks maintain their momentum, cryptocurrencies lag while inflation concerns persist.

Gold and Silver Soar, Crypto Stumbles

Gold and silver have breached historic thresholds, trading at $5,111 and $110 per ounce, respectively, fostering an environment where cryptocurrencies, including Bitcoin, find themselves battling for investor interest. This disconnect in performance grows conspicuous, as highlighted by The Kobeissi Letter, noting that silver's market capitalization has outstripped Bitcoin significantly in the recent months. Van de Poppe’s analysis points to Bitcoin's comparative undervaluation when set against gold, suggesting an opportune moment for entry despite current lows.

Short-Term Holders React with Panic

Despite Bitcoin experiencing a relatively static phase, on-chain data points towards increased sensitivity among recent investors, with Frank Fetter suggesting record levels of loss realization among short-term holders. The balance of Bitcoin supply profit continues to weaken, now at its lowest since 2024. Historical patterns indicate that a failure to bounce back over 80% in-profit supply could signal further declines.

Bitcoin's Sale Pressure: Genuine Yet Managed

Despite Bitcoin's recent drop to $86,000, CryptoQuant indicates no rush for the exits among traders. The volume delta on Binance proved substantial yet did not precipitate a price collapse, interpreted as strong liquidity support. This sell-off reflects a controlled reaction rather than panic, hinting at a rebalancing phase rather than a structural breakdown, projecting a strategically poised market rather than a tumultuous downturn.