Bitcoin remained stuck in limbo at around $88,000 on Monday as gold and silver extended their blistering rallies before taking advantage.
BTC has rallied slightly from what is now becoming a renewed pattern of weekend panic selling, but has fallen from around $90,000 late Friday. Rising odds of a government shutdown on Jan. 31 — and the liquidity squeeze that might bring — were among the main drivers of Sunday’s selloff.
However, the exact same news left precious metal bulls untouched. Gold soared through $5,000 and then $5,100 for the first time ever on Sunday and Monday, while silver ran as high as $118. However, signs of exhaustion may be setting in. Gold has pulled back all the way to $5,043 – now up 1.3% for the day – while silver has pulled back to $108, still higher by 7%.
“Gold and silver randomly add an entire bitcoin market price in a single day,” wrote well-followed cryptoanalyst Will Clemente, summarizing bitcoin investor sentiment.
The U.S. dollar index (DXY) rolled over to its weakest level since September as the U.S. Federal Reserve and the Bank of Japan reportedly joined forces to intervene in foreign exchange markets in an effort to boost the yen against the dollar. At 154.07 per yen, the dollar is down more than 1% on Monday.
Bitcoin remains reachable
The lack of bullish follow-through in bitcoin despite dollar weakness has made traders cautious in the near term, analysts at Swissblock argued. “Recent price action has reinforced the bearish outlook,” they said in a Monday note.
A decisive break below the $84,500 support level could open the door to a deeper correction towards $74,000, they warned. Still, they flagged that if this support holds while risk metrics cool, it could offer a compelling entry point for bulls.
Bitfinex analysts echoed the cautious tone, noting that BTC is likely to remain in the range between $85,000 and $94,500. They also pointed to shifts in the options market, where traders responded tactically to short-term risks without pricing in long-term volatility.
That means traders are “pricing transitory risk rather than a sustained disruption to market structure,” the analysts wrote in a Monday note.
Adding to the pressure is sustained selling from spot bitcoin ETFs. Cumulative outflows exceeded $1.3 billion over the past week, pointing to a lack of risk appetite among investors.
Risk of Government Shutdown for Crypto Legislation
Schwab’s director of crypto research and strategy, Jim Ferraioli, sees no reason to expect a sustained move beyond current levels without an increase in metrics such as on-chain activity, ETF flows or derivatives positioning, and miner participation.
A more significant catalyst, according to him, is the passage of the Clarity Act, but that could be delayed by the potential for a government shutdown. Until the legislation is passed, he expects tight trading between the low $80,000s and mid-$90,000s as large institutional players will remain on the sidelines.
