Key highlights:
- Bitcoin hovers around the $86,000 zone as traders brace for a possible US government shutdown and a closely watched Fed rate decision this week.
- Short-term traders eye any bounce as a chance to open new shorts while key support near $86,300 decides whether the slide extends toward $80,000.
- Seasonal patterns hint that January pullbacks often set up strong February rebounds, keeping a potential upside scenario alive despite rising macro risk.
On Sunday, January 25, Bitcoin tested the $86,000 level on the Bitstamp exchange, extending a pullback that has already unsettled many bulls. This week, the market faces a rare mix of political drama in Washington, a crucial Federal Reserve rate decision and Trump’s renewed tariff threats toward Canada.
Politics, the Fed and short setups
The US government is once again flirting with a shutdown, and many analysts see that standoff as a major weight on risk assets, including Bitcoin. The Kobeissi Letter, a popular macro analysis outlet, has flagged the looming shutdown as a key reason for market fragility and warned followers to “get ready for a busy week” on X.
BREAKING: Bitcoin falls below $88,000 as $60 million worth of levered longs are liquidated in 30 minutes.
A government shutdown is now expected and President Trump has threatened 100% tariffs on Canada.
US stock market futures will open in less than 7 hours. pic.twitter.com/40GxrMdRTI
— The Kobeissi Letter (@KobeissiLetter) January 25, 2026
At the same time, the Federal Reserve will deliver its first interest rate decision of the year on January 28, keeping traders glued to every macro headline. Trump has publicly pressured the central bank to start cutting rates, but markets remain skeptical that policymakers will move this early in the year.
Futures pricing still implies only a tiny probability of even a small 0.25 percentage point cut, with an overwhelming chance that rates stay unchanged.
For Bitcoin, that backdrop translates into tighter-for-longer policy, elevated yields and less excess liquidity to fuel speculative rallies. Instead of treating the meeting as a clear bullish catalyst, traders are positioning for volatility and quickly re-pricing risk with each new macro data point.
While politicians argue over spending and tariffs, market participants are zooming in on technical levels to guide their next move. Popular trader CrypNuevo has highlighted that Bitcoin is slipping below the middle of its current trading range, a development he views as a bearish signal pointing toward a retest of the lower boundary. In his view, bulls must defend the $86,300 area; if that level fails cleanly, price could gravitate toward the bottom of the range near $80,000.
BTC/USD 1-Day Chart. Source: CrypNuevo via X
This outlook has led many short-term traders to frame any bounce this week as a potential opportunity to open short positions rather than chase upside momentum. For them, the combination of political risk, Fed uncertainty and fragile technicals makes fading rallies more attractive than buying dips.
Silver’s signal and the seasonal puzzle
Yet the picture is not unanimously bearish. Crypto trader Michaell van de Poppe has pointed to an unlikely source of optimism: the Bitcoin-to-silver ratio. With both gold and silver recently pushing to new highs, he argues that Bitcoin may be forming a bullish divergence against silver on the three-day BTC/XAG chart, potentially signaling that a bottoming process is underway.
BTC/XAG 3-Day Chart. Source: Michael van de Poppe via X
In this scenario, silver’s outperformance would be close to peaking as capital gradually rotates toward other assets, including Bitcoin. Van de Poppe suggests that such a shift could make the coming days extremely volatile but ultimately constructive for longer-term bulls.
AI-driven pattern analysis also adds an interesting seasonal backdrop. Over the past several years, Bitcoin has frequently seen meaningful corrections in January, only to rebound sharply into February with double-digit percentage gains.
The current drawdown, both in timing and depth, fits neatly within that seasonal framework, making it look more like a recurring feature than an outright breakdown.
At the same time, correlation studies show that while traditional assets have recently held up surprisingly well despite mounting political risk, Bitcoin is behaving like a classic high-beta risk asset that reacts first to uncertainty. The key question now is whether the familiar pattern of a weak January and strong February can survive in an era dominated by ETFs, programmatic flows and macro-driven algorithms.
For now, the market is caught between political headlines and technical lines in the sand. The Fed’s decision, the shutdown saga and tariff rhetoric will dictate the tone of the week, while traders watch $86,300 as a crucial line of defense and $80,000 as the next major downside magnet if that support gives way.
Source:: Bitcoin Balances On The Edge As Politics, The Fed And Silver Collide