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Trader conviction is fading, with futures open interest down 42% and rallies quickly met by sharp sell-offs.
Crypto Journalist
Amin Ayan
Crypto Journalist
Amin Ayan
Part of the Team Since
Apr 2025
About Author
Amin Ayan is a crypto journalist with over four years of experience in the industry. He has contributed to leading publications such as Cryptonews, Investing.com, 99Bitcoins, and 24/7 Wall St. He has...
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Last updated:
January 29, 2026
Bitcoin has slipped back below the $89,000 level after failing to hold onto a brief recovery, as tighter financial conditions and geopolitical stress continue to weigh on risk assets.
Key Takeaways:
Bitcoin has slipped below $89,000 as a hawkish-leaning Federal Reserve and Middle East tensions sap risk appetite.
Trader conviction is fading, with futures open interest down 42% and rallies quickly met by sharp sell-offs.
Institutional investors are turning cautious, as ETF outflows rise and expectations for near-term rate cuts fade.
The pullback comes amid growing caution from the US Federal Reserve and fading investor appetite across crypto markets, according to Samer Hasn, Senior Market Analyst at XS.com.
In a note shared with Cryptonews.com, Hasn said market sentiment has been pressured by a central bank stance that remains neutral to hawkish, alongside rising tensions in the Middle East that have dampened demand for speculative assets.
Crypto Loses Momentum as Capital Dries Up and Traders Pull Back.
While gold and silver have attracted renewed interest, digital assets are struggling to draw fresh inflows. “The crypto space is seeing its speculative fire extinguished by a lack of fresh capital,” Hasn said.
Derivatives data points to a clear loss of conviction. According to CoinGlass, crypto futures open interest is down 42% from record highs, signaling reduced risk-taking.
Attempts at bullish breakouts have been met with sharp sell-offs, with traders “quick to exit at the first sign of trouble,” suggesting a fragile market structure.
Institutional behavior has also turned defensive. Data from SoSoValue shows Bitcoin spot exchange-traded funds recorded $160 million in outflows over the past three trading sessions.
Rather than stepping in on weakness, larger investors appear to be waiting on the sidelines as volatility persists.
The policy backdrop remains a key drag. Federal Reserve Chair Jerome Powell recently signaled little urgency to cut rates, with benchmark rates held in the 3.5% to 3.75% range.
Former Fed economist William English said officials are likely to remain on hold unless there is a significant shift in labor market conditions.
“The internal friction at the Fed, highlighted by two dissenting votes from Trump appointees, adds a layer of political uncertainty that markets rarely enjoy,” Hasn said.
Geopolitical Tensions Drive Investors Away From Bitcoin.
Political and geopolitical factors are adding further uncertainty. Internal divisions at the Fed, combined with leadership...
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