Bitcoin dips under $88,000 as shutdown fears loom and markets brace for the Fed’s first rate call of the year

Bitcoin and major tokens fell on Sunday as traders positioned cautiously ahead of the Federal Reserve’s next policy decision and a packed week of earnings from Big Tech.

Bitcoin slipped below the $88,000 mark during thin weekend trading, extending a broader pullback that has weighed on crypto markets over the past week. The largest cryptocurrency was trading near $87,800 in U.S. afternoon hours, down about 2% over the past 24 hours, according to CoinDesk data.

Ether declined toward $2,880, while solana, XRP and cardano each fell between 3% and 5% on the day. Most major tokens remain sharply lower on a seven-day basis, underscoring fragile sentiment across digital asset markets.

The sell-off triggered $224 million in liquidations of bullish positions over the past 24 hours, led by $68 million in bitcoin-linked futures and $45 million tied to ether contracts, CoinGlass data showed.

Weekend price moves are often driven more by positioning adjustments than fresh catalysts, particularly after periods of heightened volatility earlier in the week.

Macro risks resurface

Traders are entering the new week on heightened alert following renewed volatility in the Japanese yen. Concerns about potential intervention resurfaced after Prime Minister Sanae Takaichi warned against “abnormal” currency moves, comments that followed a sharp reversal in the yen late Friday.

The sudden rally in the currency raised caution across Asian trading desks, even as officials stopped short of confirming any imminent action, according to Bloomberg.

Shutdown risk adds pressure

Political uncertainty in the U.S. added to the uneasy backdrop. Senate Democratic leader Chuck Schumer said his party would block a major spending package unless funding for the Department of Homeland Security is removed, raising the risk of a partial government shutdown.

While such standoffs are not uncommon, they can tighten near-term liquidity and weigh on risk sentiment, particularly when positioning is already stretched. Historically, bitcoin has often faced selling pressure ahead of potential shutdowns, followed by rebounds once uncertainty clears.

Polymarket traders are currently assigning a 76% probability to a U.S. government shutdown by the end of the month.

Earnings and the Fed in focus

Attention now shifts to a busy week ahead, highlighted by earnings from several megacap technology firms, including Microsoft, Meta Platforms, Tesla and Apple — key members of the so-called “Magnificent Seven.”

Markets will be watching closely for signals on how artificial intelligence-related investments are translating into revenue and margins. Commentary on AI demand and spending plans could drive broader risk sentiment, with bitcoin — increasingly trading like a risk asset — likely to react alongside equities.

The Federal Reserve’s first rate decision of the year will also be closely watched. While policymakers are widely expected to hold rates steady, investors will parse Chair Jerome Powell’s post-meeting remarks for clues on the timing and direction of future policy moves, which could influence bitcoin and other asset classes.

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