Bitcoin It remained stuck in limbo around $88,000 on Monday as gold and silver extended their explosive rallies before paring gains.
BTC is now slightly above what is forming a new pattern of panicked weekend selling, but remains below around $90,000 late Friday. The growing possibility of a government shutdown on January 31 – and a lack of liquidity – was one of the key reasons for Sunday’s selloff.
However, the exact same news surprised precious metals bulls. On Sunday and Monday, gold first rose to $5,000 and then to $5,100, while silver reached $118. However, signs of exhaustion are coming. Gold has completely retreated to $5,043 – now up 1.3% for the day – while silver has fallen to $108, still up 7%.
Summarizing the mood of Bitcoin investors, well-known crypto analyst Will Clemente wrote, “Gold and silver are adding to the entire Bitcoin market cap in a single day.”
The US dollar index (DXY) slipped to its weakest level since September as the US Federal Reserve and the Bank of Japan reportedly worked together to intervene in currency markets in an effort to boost the yen versus the greenback. At 154.07 per yen, the dollar is more than 1% lower on Monday.
Bitcoin will remain in a limited range
SwissBlock analysts argue that Bitcoin’s lack of bullishness despite dollar weakness has made traders cautious for the near term. “Recent price action has reinforced the bearish outlook,” he said in a Monday note.
He warned that a decisive breakdown below the $84,500 support level could open the door to a deeper correction towards $74,000. Nevertheless, he indicated that if this support holds while risk metrics cool, it could provide an attractive entry point for bulls.
Bitfinex analysts struck a cautious tone, saying BTC is likely to remain range-bound between $85,000 and $94,500. He also pointed to changes in the options market, in which traders are smartly responding to short-term risks without pricing in long-term volatility.
That means traders “are pricing in temporary risk rather than sustained disruption to market structure,” the analysts wrote in a Monday note.
Continued selling from spot Bitcoin ETFs is adding to the pressure. Cumulative outflows exceeded $1.3 billion last week, pointing to a lack of risk appetite among investors.
Government Shutdown Risk for Crypto Law
Schwab director of crypto research and strategy, Jim Ferraioli, sees no reason to expect continued gains beyond current levels without a pickup in metrics such as on-chain activity, ETF flows or derivatives positioning and miner participation.
A more important catalyst, according to him, is the passage of the Clarity Act, but this may be delayed due to the possibility of a government shutdown. Until the law is passed, he expects limited trading between the low $80,000 and mid-$90,000 range, as major institutional players will remain on the sidelines.