Why $90,000 Is the Critical Level of Bitcoin’s Trend｜Matrixport Research

The recent wave of Bitcoin selling by hedge funds may be nearing its end. Funding and basis rates have fallen over the past few weeks, accompanied by a significant decline in CME Bitcoin open interest. The selling pressure now appears to be largely exhausted. However, Bitcoin remains in a consolidation phase and is unlikely to challenge new all-time highs soon.

The topping process for Bitcoin began with stronger-than-expected U.S. employment data in early December 2024, which initially deflated altcoin momentum. This was followed by a hawkish FOMC meeting in mid-December, marking Bitcoin’s peak.

Although Bitcoin made another rally attempt heading into Trump’s inauguration on January 20, 2025, the collapse of the Trump meme coin — launched just days prior — triggered the broader unwinding of the meme coin bull market. This series of events led to a broader topping formation across altcoins, Bitcoin, and meme coins, pushing Bitcoin into its current consolidation phase. The Fed is now a key factor in determining whether Bitcoin breaks out of this range or faces a deeper correction.

Since Trump’s election in November 2024, a clear trend has emerged: wallets holding between 100 and 1,000 BTC (roughly $8 million to $80 million) have become the dominant cohort. This likely reflects growing participation from family offices and wealth managers accumulating Bitcoin for the long term, especially now that regulatory clarity has improved. This structural shift is a key reason why we no longer expect the extreme 70–80% drawdowns that characterized past Bitcoin cycles.

While this week’s FOMC meeting may not be dovish enough to drive a significant rally in Bitcoin and altcoins, it did mark a slight pivot. Chair Powell signaled that the Fed will “look through” the recent rise in inflation expectations and does not believe the Trump tariffs will lead to persistently elevated inflation.

The Fed will adopt a wait-and-see approach rather than responding to these inflationary pressures with rate hikes. Growth expectations were revised lower, but the Fed would tolerate temporary inflation risks. Coupled with a slower pace of quantitative tightening, this meeting can be interpreted as mildly dovish, offering some downside support for Bitcoin and equities.

Bitcoin has remained below its 21-week moving average for the past three weeks, suggesting we are currently in a bear market. We place considerable weight on this indicator, and as long as Bitcoin closes below $88,574, we must acknowledge a bearish environment. A close above this level would shift us back to a bullish stance.

Disclaimer: The above content is for informational purposes and reference only. The content does not constitute investment advice. Digital asset transactions can be precarious and volatile. Investment decisions should be made after carefully considering individual circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.

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