Bitcoin Updates: The Fragile State of Bitcoin—Federal Reserve Moves, MSCI Examination, and Leverage-Induced Downturn
- Bitcoin's 30% drop to seven-month lows reflects Fed policy shifts, regulatory scrutiny, and leveraged trading risks. - Diminished Fed rate-cut expectations (30% in Dec) and MSCI's review of Bitcoin-heavy firms like MicroStrategy threaten $8.8B in passive outflows. - $1.27B in leveraged liquidations and CFTC's expanded oversight amplify structural vulnerabilities as Bitcoin correlates with risk assets. - Market awaits Fed easing and MSCI's Jan 2026 index decision, with Bitcoin potentially testing $85,000
Bitcoin has experienced a steep drop, with its value approaching the lowest point in seven months, prompting widespread discussion about the underlying causes of the downturn. Experts and traders have identified three main drivers: evolving expectations around Federal Reserve policy, increased regulatory attention on Bitcoin-centric firms, and inherent fragilities in leveraged trading practices.
The reduced chances of interest rate cuts by the Federal Reserve have heightened the strain on riskier investments.
Adding to the market’s uncertainty, index provider
Structural issues within the market have further increased price swings.
The combination of these elements has left the market in a precarious state.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Bitcoin Plunges 20% Unexpectedly: Unraveling the Causes of Its Wild Price Swings
- BlackRock’s ETF outflows and Bitcoin’s 20% drop to $83,461 in late 2025 highlight market instability. - Macro risks like inflation and Fed rate uncertainty amplify Bitcoin’s volatility amid geopolitical tensions. - SEC’s AI governance rules and stalled ETF approvals add regulatory ambiguity, pushing investors toward hedging strategies. - Bitcoin’s recovery hinges on reclaiming $90,000 support levels as diversified strategies counterbalance risks.
Ethereum Updates: DATs' Repurchasing of Shares Triggers ETH Sell-Offs, Intensifying the Bearish Trend
- FG Nexus sold 11,000 ETH ($33M) to repurchase 8% of shares at $3.45, below its $3.94 NAV, pushing ETH to $2,860. - DATs managing $42.7B in crypto assets face steep NAV discounts, forcing ETH sell-offs to prop up equity valuations. - FG Nexus CEO Kyle Cerminara stated the buyback strategy aims to strengthen balance sheets, but critics warn it risks accelerating ETH’s price erosion. - Ethereum’s 50/100/200-day EMAs remain descending, RSI near oversold 26, with analysts warning a $2,850 break could push ETH

Bitwise launches the first spot XRP ETF on the NYSE
MSCI considers excluding crypto-treasury companies from equity indices
