After touching an intraday high of $92,356, Bitcoin slipped back to retest the $90,000 psychological support as optimism around a potential Fed rate cut began to fade.
Sentiment was also dampened by persistent outflows from spot crypto ETFs, which kept investor interest in check.
The total cryptocurrency market cap dropped below $3.2 trillion and was down slightly over 1% at the time of writing.
While overall market sentiment remained within the lower end of the ‘neutral’ zone, the mood reflected a clear sense of caution.
Only a few altcoins among the top 100 managed to stay in the green, with just two posting double-digit gains.
Most others ended the day with losses or minimal movement, underscoring the selective nature of the current rebound.
Why is Bitcoin price down today?
Bitcoin’s rally to an intraday high of $92,356 early in the day was largely sparked by an extraordinary political showdown between the Federal Reserve and the Department of Justice.
Following news that broke late Sunday, investors reacted to a video statement from Fed Chair Jerome Powell, who revealed he had been served with grand jury subpoenas.
This unprecedented friction initially triggered a flight to safety, with many market participants rotating into decentralized assets as a hedge against the perceived threat to central bank independence.
During this morning surge, Bitcoin and privacy-centric tokens like Monero found strength as the market weighed the implications of a criminal investigation into the sitting Fed Chair.
The bullish momentum hit a ceiling later in the afternoon as the focus shifted from political drama to the cold reality of upcoming monetary policy.
While the DOJ investigation created short-term volatility, the safe-haven narrative was eventually overtaken by broader macroeconomic concerns ahead of the January 28 Fed meeting.
Recent economic indicators, including a strong labour market and resilient services activity, have significantly lowered the probability of a rate cut in March.
This shift toward a “higher for longer” interest rate environment helped the dollar regain its footing, naturally putting downward pressure on high-risk assets like Bitcoin.
Adding to the price retreat was a notable lack of support from institutional buyers.
According to recent data from CoinShares, global crypto investment products saw approximately $454 million in net outflows over the past week, effectively wiping out much of the enthusiasm seen at the start of the year.
As Wall Street participants moved to rebalance their portfolios and lock in profits from the initial Trump Trade, the absence of fresh spot ETF inflows allowed Bitcoin to drift back toward the $90,000 support level.
This area remains a vital line in the sand for the current market structure, as bulls look to defend this floor to avoid a deeper slide into the mid-$80,000 range.
Will Bitcoin price go up?
On X, the conversation over the last 24 hours has been a tug-of-war between those eyeing a local top and those betting on Bitcoin’s role as a political hedge.
“Over the past 6 Asian session pumps, 4 out of 6 were fully retraced. The last two times price pumped into a Monday, it marked a local top and fully reversed the move, giving back even more. We’re once again pumping into Monday. Keep the Jan 13th pivot in mind,” pseudonymous crypto analyst LP wrote in a recent X post.
Looking at the bigger picture, analyst CrypNuevo drew attention to the 50-week exponential moving average (EMA), identifying the $97,400 level as a likely destination for a relief rally before the market potentially explores lower ground. See below.
While he identified the $97,400 mark as a key objective for a relief rally, he expects Bitcoin to eventually return to the low $80,000s.
Fellow market watcher Roman also projected a similar trajectory but set a slightly lower target at $76,000, after which he expects “a decent bounce.”
“I think it’s coming soon,” the analyst wrote while sharing the chart below.
Meanwhile, according to an analysis shared by fellow market analyst CryptoELITES, the Bitcoin price was approaching a crucial support on the BTC/BTC.D ratio chart.
According to the analyst, if this ratio successfully bounces off the multi-year ascending support line, it confirms that Bitcoin is entering a period of significant relative strength compared to the rest of the market.
A confirmed move higher from this 1.540 level would signal that Bitcoin is likely to lead the next major leg of the cycle, potentially invalidating any immediate hopes for an altseason.
At press time, Bitcoin was trading a little over $91,600, with gains of roughly 1% on the day.
Right now, $90,000 stands as the closest support level that the flagship crypto must hold to prevent further downside and generate the momentum for a relief rally.
Top altcoin gainers for the day
The altcoin market cap rose nearly 3% to $1.41 trillion earlier in the day before losing most of its intraday gains and settling at $1.37 trillion at press time.
Market sentiment around altcoins appears to be cooling off, as indicated by the Altcoin Season Index that market watchers use to gauge the performance of the altcoin market in comparison to Bitcoin.
At press time, the metric showed a reading of 31, down from 49 where it stood at last Thursday.
For context, a reading at or above 75 is usually taken as a sign of a true altcoin season at play, while a reading at or below 25 suggests Bitcoin’s dominance over the market.
Ethereum (ETH) initially rallied from $3,100 to an intraday high of $3,165 before losing most of its momentum and dropping to $3,114 when writing.
XRP (XRP), BNB (BNB), Tron (TRX), and Dogecoin also tipped slightly red with losses of 1-2% respectively. Solana (SOL) bucked its peers with gains of 2% today.
Story (IP) outpaced the other altcoins with gains of 27.5%, supported by a surge in interest from Asian traders.
Investors also responded to a technical breakout from a cup and handle pattern that had been forming since early December last year.
Monero (XMR) followed with gains of nearly 13%, largely due to renewed market interest in privacy-related protocols and crypto assets, and capital rotation from Zcash (ZEC), which is undergoing a governance crisis after several of its core developers resigned en masse following a dispute with its overseeing nonprofit board, Bootstrap.
As for Aerodrome (AERO), which posted gains of over 4% on the day, likely as a result of speculative trading, alongside other factors such as ongoing programmatic buybacks by the project team and rising futures market activity.
Source: CoinMarketCap