Bitcoin Today News: Hawkish Federal Reserve not cutting interest rates, $88,000 support at risk

Bitcoin fell to around $88,000 on January 29, with increased trading volume indicating bearish sentiment. The Federal Reserve maintained interest rates at 3.50%-3.75%, with US-Iran tensions boosting safe-haven demand. On-chain data shows rising loss supply, and average exchange deposits increased from 0.7 BTC to 1.2 BTC. Technical analysis points to a descending wedge target of $84,000, with a weekly bear flag pointing to $70,000.

Federal Reserve Pauses Rate Cuts, Reinforcing High-Interest Rate Expectations

(Source: Trading View)

After three rate cuts last year, the Federal Reserve has kept rates steady at 3.50% to 3.75%. Due to persistent inflation and a cooling labor market, Fed officials suggest a wait-and-see approach. Chairman Powell did not explicitly signal further rate cuts at the press conference, aligning with market expectations but still exerting pressure on risk assets.

Rising interest rates increase the opportunity cost of holding yield-bearing assets like US Treasuries. Conversely, this reduces the attractiveness of risk assets such as Bitcoin and stocks, and recent data supports this. For example, S&P 500 futures contracts declined 0.52% on January 29, consistent with Bitcoin’s decline that day. This correlation indicates Bitcoin is increasingly viewed as a risk asset rather than a standalone safe haven.

The expectation that “high interest rates will persist longer” poses structural pressure on Bitcoin. When risk-free rates stay above 3.5%, investors are less willing to hold assets like Bitcoin that do not generate cash flow. In contrast, US Treasuries offer certain yields with minimal risk, making this competition highly unfavorable for Bitcoin in a high-rate environment.

According to CME FedWatch, market expectations for a March rate cut have fallen below 15%, with only a 60.8% chance of a June cut. This shift suggests high interest rates could persist into late 2026, creating a long-term headwind for Bitcoin.

Escalating US-Iran Tensions: Gold Hits New High, Bitcoin Loses Favor

Geopolitical factors have also heightened risk aversion. This week, US-Iran tensions escalated, with the US deploying aircraft carrier strike groups to the region, increasing the likelihood of conflict. On January 29, oil prices rose for the third consecutive day amid fears of further price increases. Gold prices also hit a record high, surpassing $2,900 per ounce, further diminishing the appeal of Bitcoin and stocks for traders.

This market reaction reveals that Bitcoin’s role as a safe haven is being challenged. Theoretically, during geopolitical uncertainty, decentralized assets like Bitcoin should be in demand. However, in actual crises, investors tend to favor proven safe havens like gold. The “digital gold” narrative for Bitcoin has not gained market acceptance at critical moments.

Rising oil and gold prices often signal renewed inflation pressures. If inflation data rises again, the Fed may refrain from cutting rates or even consider hikes. Such a policy shift would severely impact Bitcoin, as the combination of high inflation and high interest rates spells disaster for risk assets.

With S&P 500 futures down 0.52%, oil prices continuing to rise, and US-Iran tensions escalating, risk aversion intensifies. This confluence of negative factors makes it difficult for Bitcoin to find upward catalysts in the short term. Investors are reassessing asset allocations, shifting funds from risk assets to safe havens, with Bitcoin bearing the brunt.

On-Chain Data Signals Rising Loss Supply Warning

(Source: CryptoQuant)

Bitcoin’s loss supply has begun to increase after years of decline, serving as an early warning sign that downside pressure is spreading beyond short-term traders. Historically, this turning point coincides with early bear market stages, where losses shift from weak investors to longer-term holders.

In previous declines (2014, 2018, 2022), this indicator started rising before price bottomed, which continued to decline. The actual lows occurred after loss supply expanded into surrender zones. Currently, loss supply remains well below extreme historical levels, but the directional shift is critical. It suggests Bitcoin may be transitioning into a bear market structure rather than just a quick correction within a bull trend.

Two Major On-Chain Warnings

Rising Loss Supply: From multi-year decline to increase, historically indicating early bear market phase

Exchange Deposits Increase: Average deposits rose from 0.7 BTC to 1.2 BTC, suggesting whale accumulation for potential sell-off

Between November 2025 and January 2026, as Bitcoin prices climbed from $80,000 to $98,000, exchange deposits increased from 0.7 BTC to 1.2 BTC. This indicates whales may be positioning to sell or hedge during market strength, as increased deposits—especially on Binance—often precede or accompany liquidity and distribution before or during volatility.

This whale behavior warrants caution. Large holders transferring Bitcoin from cold wallets to exchanges typically signal intentions to sell or hedge. The 71% increase from 0.7 BTC to 1.2 BTC in deposits has historically preceded significant price swings.

Technical Double-Down on Bearish Structure Points to Deeper Pullback

(Source: Trading View)

The BTC/USD four-hour chart suggests Bitcoin could decline to $84,000 in early February, as prices continue to oscillate along the lower boundary of a descending wedge. This structure often leads to further declines before a breakout attempt. The zone also coincides with a key Fibonacci support area (near the 0.786 retracement), reinforcing a “magnet” effect. A decisive break below this zone could open the door to deeper downside.

The weekly chart also shows a bear flag pattern. In January, BTC rebounded after testing the flag’s lower trendline (overlapping with the 100-week EMA), helping stabilize short-term prices. However, the overall structure still indicates a downward-sloping channel, with lower highs, implying a bearish trend.

If Bitcoin closes the week below the flag support, it could trigger a continuation of the decline, with the next major support near $70,000, overlapping with the 200-week moving average. The 200-week MA is a key long-term trend indicator, historically providing a final line of defense in bear markets. If this support fails, Bitcoin could enter a deeper bear cycle.