Bitcoin Slips Below $90K as Fed Uncertainty and Weak Liquidity Weigh on Price: Analyst

Bitcoin has fallen below the $90,000 level, extending a pullback from its recent peak near $120,000 as investors grapple with uncertain macroeconomic signals and uneven liquidity conditions.

According to Linh Tran, market analyst at XS.com, Bitcoin’s recent price action underscores the market’s sensitivity to monetary policy expectations rather than headline economic data.

While US inflation has eased from last year’s highs, the latest consumer price index reading of 2.7% suggests that the disinflation process remains slow and uneven, forcing “the Fed to maintain a cautious stance, making it difficult to pivot quickly toward an aggressive easing cycle,” Tran said in a note shared with Cryptonews.com.

High Interest Rates Keep Institutional Capital Cautious on Bitcoin

As interest rates stay elevated, the cost of capital continues to weigh on speculative assets. Tran noted that Bitcoin tends to respond to forward-looking liquidity expectations, meaning that without clear conviction around a sustained easing cycle, institutional capital is likely to remain selective or sidelined.

“As long as the market lacks clear conviction that the Fed will deliver a decisive rate-cutting cycle, large capital flows tend to remain on the sidelines or participate only cautiously and selectively,” she added.

Strength in the US dollar and rising Treasury yields have added further pressure. The dollar index has climbed for several sessions, while the 10-year US Treasury yield has pushed toward a three-month high near 4.17%.

$BTC: Price is trading above the lower boundary of the Gaussian channel. To maintain a bullish outlook, weekly closes should remain above this level. pic.twitter.com/mJnwqtShQ0

— Man of Bitcoin (@Manofbitcoin) December 21, 2025

Higher real yields typically diminish the appeal of non-yielding assets such as Bitcoin, particularly for institutions operating under strict allocation frameworks.

The growing role of spot Bitcoin exchange-traded funds has also reshaped market dynamics. While ETFs have broadened access and deepened institutional participation, they have also tied Bitcoin more closely to traditional capital flows.

“From a long-term perspective, the growing involvement of major financial institutions – from asset managers to banks – continues to reinforce Bitcoin’s position as an increasingly institutionalized asset, distinctly different from previous cycles,” Tran said.

Sit quietly and think deeply for a moment about what printing up to $20T by the end of ‘27 does to the price of Bitcoin. 🤯 pic.twitter.com/2avQkfQhVu

— Justin Bechler (@1914ad) December 21, 2025

Low Exchange Reserves Signal Holder Confidence

On-chain indicators suggest that long-term holders remain active, with exchange reserves staying relatively low.

Last week, K33 also said Bitcoin’s prolonged sell-side pressure from long-term holders may be approaching its limits after years of steady distribution.

However, Tran cautioned that this does not guarantee near-term upside. Some long-term holders have taken profits after the previous rally, while others continue to treat Bitcoin as a strategic allocation.

She concluded that Bitcoin’s next decisive move will likely depend on clearer signals of monetary easing and a more supportive liquidity environment.

“In my view, the market is more likely to continue oscillating within a wide range and attempt to re-accumulate while waiting for new catalysts, either from a renewed pickup in institutional inflows or from a more constructive macroeconomic outlook,” she said.

As reported, gold has jumped to a fresh record of $4,383.73 an ounce, supported by rate cut expectations, safe haven demand, and a softer dollar.

Silver also pushed to a record, extending a powerful rally that has turned the metal into one of 2025’s standout trades.