Market Shifts and Federal Reserve Changes
Bitcoin continued its downward trend on Friday, dropping about 3% during the day and breaking through the $95,000 level. This movement appears connected to broader economic signals that are causing investors to reposition their digital asset holdings. According to James E. Thorne, who serves as Chief Market Strategist at WellingtonAltus, this price decline comes during a period of structural changes at the Federal Reserve while institutional interest in Bitcoin continues to grow.
Thorne suggests that the recent reopening of the U.S. government after a 43-day shutdown, combined with the Treasury Department’s renewed management of its general account, points toward an upcoming injection of liquidity into financial markets. He anticipates that quantitative tightening measures will end soon, which would then allow for continued interest rate reductions until the federal funds rate approaches 2.75%. Looking further ahead, Thorne believes the 2026 reshaping of the Federal Open Market Committee, including the replacement of Chair Jerome Powell, will mark a significant shift away from what he calls Progressive Left Keynesian influence at the central bank.
Economic Consequences and Bitcoin’s Position
The strategist identifies a housing recession as a direct result of what he views as Federal Reserve policy mistakes. He notes that backward-looking economic indicators and what he considers overtightened financial conditions have distorted credit availability across the economy. Despite these economic challenges, Thorne highlights that Bitcoin adoption continues to increase, driven by expected regulatory clarity and what he describes as Bitcoin’s unmatched digital scarcity.
Institutional engagement with Bitcoin appears to be deepening as Wall Street firms integrate the cryptocurrency across various business areas including trading, custody services, and structured products. Thorne concludes that selling Bitcoin during what he sees as a liquidity expansion cycle reflects what he calls persistent investor irrationality.
Technical Analysis and Price Outlook
From a technical perspective, Bitcoin currently trades around $95,558, moving deeper into what analysts describe as a corrective phase with sellers maintaining control. The Parabolic SAR indicator shows dots positioned above current price action, suggesting continued trend weakness. Breakout probability models indicate about a 55.57% chance of further downside movement, with only around 31.66% probability of upside movement, reinforcing the bearish near-term structure.
Momentum indicators remain fragile. The daily Relative Strength Index sits at approximately 31.15, approaching oversold territory but lacking any clear bullish divergence patterns. The BBP indicator shows a deeply negative reading of -11,537, confirming that bearish momentum appears to be accelerating rather than stabilizing.
Moving averages provide little comfort for bulls, with Bitcoin trading well below its 50-day, 100-day, and 200-day simple moving averages. These technical levels cluster around $110,000 to $112,000 and now function as layered resistance zones.
Critical Levels and Potential Scenarios
A clean bounce from the $94,500 level becomes critical to prevent a deeper slide toward $92,000, which represents the next significant support zone with higher liquidity. If buyers successfully defend this region, a recovery toward $100,000 becomes more feasible, potentially followed by a retest of $105,000 if momentum conditions improve.
The bullish continuation setup would only activate if Bitcoin manages to break above $110,078, the level where the Parabolic SAR and moving averages converge to cap the current structure. On the downside, invalidation of any near-term recovery scenario would occur on a daily close below $92,000, which would confirm a broader bear cycle extension and potentially expose the $88,500 level as the next significant support area.
I think it’s worth noting that while technical indicators paint a challenging picture in the short term, the underlying institutional adoption story continues to develop. Perhaps we’re seeing a temporary disconnect between short-term price action and longer-term fundamentals. The market seems to be grappling with multiple factors simultaneously – Federal Reserve policy expectations, technical levels, and institutional adoption trends all playing their part in current price movements.
