Analysis: Bitcoin's difficulty in breaking through $90,000 may be due to the Federal Reserve shrinking its balance sheet and draining market liquidity

Odaily Planet Daily reports that Bitcoin has failed to hold the key level of $92,000 over the past month and is currently hovering below $90,000. Some traders believe that the recent decline in Bitcoin’s price is due to market manipulation, while others attribute the price drop to growing concerns about the artificial intelligence industry. However, analysis suggests that an important factor limiting Bitcoin’s price increase is the Federal Reserve’s plan to reduce its balance sheet for most of 2025, which has drained liquidity from the financial markets. Despite clear signs that the Fed is shifting towards a more accommodative monetary policy, traders are uncertain whether the Fed can lower interest rates below 3.5% in 2026. As investor risk aversion intensifies, Bitcoin is unlikely to serve as a hedge in the short term. (Bloomingbit)