Bitcoin Plunges to Two-Month Low Amid Risk-Off Sentiment

Bitcoin CRYPTO000BTC

Digital asset markets faced a severe downturn on Thursday, with Bitcoin dropping to approximately $84,000. This marks its lowest valuation since November 2025. In a stark contrast, the price of gold surged to a fresh record high above $5,590 per ounce. The divergent performance sends a clear signal of a flight to traditional safe-haven assets and a broad retreat from risk.

The primary catalyst for the market's anxiety stems from the latest Federal Reserve meeting. U.S. central bankers held the benchmark interest rate steady within the 3.50% to 3.75% range. Crucially, Chair Jerome Powell indicated that imminent rate cuts are unlikely, reinforcing a "higher-for-longer" monetary policy stance. This approach tends to bolster the U.S. dollar and applies significant pressure to speculative investments, including cryptocurrencies. Elevated interest rates enhance the appeal of yield-bearing alternatives, drawing capital away from digital assets.

A Wave of Forced Selling

Bitcoin's sharp decline from nearly $90,000 to an intraday low around $84,200 triggered massive forced liquidations. Data shows that between $740 million and $800 million in leveraged trading positions were closed within a 24-hour window, with long positions accounting for the majority.

This risk-off move mirrored activity in traditional equity markets. The technology-heavy Nasdaq index fell roughly 2%, driven in part by an 11-12% plunge in Microsoft shares. Bitcoin's nearly synchronous drop underscored its current correlation with risk assets, while gold's rally highlighted its status as a preferred harbor during market stress.

Regulatory Landscape Sees Key Development

Despite the price slump, a significant regulatory milestone was reached in Washington D.C. The Senate Agriculture Committee voted 12 to 11 to advance the "Digital Commodity Intermediaries Act." The proposed legislation would grant the Commodity Futures Trading Commission (CFTC) direct oversight authority over digital commodities like Bitcoin.

The vote split strictly along party lines, with Democrats unanimously opposing the bill due to concerns over insufficient consumer protections. Before becoming law, the bill must still clear the Senate Banking Committee and be reconciled with a differing version expected from the House of Representatives.

In a related move, the Securities and Exchange Commission (SEC) and the CFTC jointly announced "Project Crypto," an initiative aimed at harmonizing the regulatory framework for digital assets.

Institutional Sentiment Presents a Mixed Picture

Institutional activity reveals a divergence in strategy. On one hand, Sygnum Bank successfully raised $65 million (equivalent to roughly 750 BTC) for its new "BTC Alpha Fund," and the investment firm Metaplanet secured $137 million for Bitcoin purchases. Conversely, U.S. spot Bitcoin ETFs experienced substantial outflows, estimated between $140 million and $160 million.

Market technicians are now watching the $84,000 level closely. A sustained break below this support could pave the way for a test of $80,000. Market participants are also looking ahead to a scheduled meeting on February 2nd between White House officials, banking representatives, and cryptocurrency lobbyists, which will focus on the stalled legislative process.