Bitcoin price faces a crash this week, while gold continues to hit new highs. BTC now faces the Fed monetary policy decision, spot ETF outflows, stablecoin liquidity tightening, and crypto options expiry, after failing to hold $90K amid concerns over tariffs and the US government shutdown.
Bitcoin Price Drops and Gold Rises amid Falling Stablecoin Liquidity
Bitcoin price has diverged sharply from gold, driven by safe-haven demand amid economic uncertainty, persistent inflation, and geopolitical risks. According to a Matrixport report, capital is rotating from stablecoins into traditional safe havens like gold and silver.
Reducing stablecoin supply caused Circle to shift focus to transaction velocity. USDC issuer is now focusing on real-world usage like the Circle Payment Network and partnerships with firms such as Intuit.
Additionally, Matrixport added that the GENIUS Act, prohibiting stablecoin issuers from paying yields to holders, will further tighten liquidity and reduce inflows into the crypto market. Notably, USDC saw $6.5 billion in redemptions over the past 6 weeks. Without fresh stablecoin-driven liquidity, Bitcoin price risks further selloffs.
Moreover, a potential US government shutdown this week could delay the CLARITY Act. It could tighten liquidity and increase selling pressure on Bitcoin price.
FOMC Meeting and Hawkish Fed Signals
The Fed is widely anticipated to pause interest rate cuts at FOMC meeting today. The CME FedWatch Tool shows a 97% odds of the Fed will keep the rates steady in the 3.5%-3.75% range. Bitcoin price risks fall as a pause reduces expectations for near-term liquidity injections.
Bitcoin and crypto traders will look for cues on Fed monetary policy outlook and Jerome Powell’s press conference for any guidance on the next rate cut. The odds of a Fed rate cut by June have climbed just ahead of the FOMC meeting. Notably, JPMorgan expects no Fed rate cut in 2026 as strong GDP figures and jobs data signaled a resilient economy.
However, U.S. President Donald Trump on Tuesday said the US Federal Reserve will cut interest rates once he announces his pick to replace Fed Chair Jerome Powell.
Yen Strengthens Against US Dollar
The Japanese yen strengthening against the US dollar in recent sessions, amid speculation of potential US and Japan interventions. At the time of writing, JPY is trading at a 3-month high of around 152.58 per dollar on Wednesday.
A stronger yen can prompt hedge funds and other institutional investors to trigger a yen carry trade unwind. In a Yen carry trade, investors borrow cheaply in yen to invest in higher-yielding risk assets such as Bitcoin and other crypto assets. Yen strengthening typically triggers forced liquidations and de-risking, causing Bitcoin price to crash.
While a weak dollar could boost Bitcoin investments, traders will look into the short-term impact of carry trade unwinds. Trump’s positive remarks on a weakening US dollar and the Bank of Japan eyeing more rate hikes have further supported JPY’s advance today.
Bitcoin Price Falters Amid ETF Outflows
Spot Bitcoin ETFs experienced significant outflows, with billions redeemed in recent periods. Notably, almost $1.5 billion in net outflow signaled negative sentiment among institutional investors.
Bitcoin ETFs recorded a net outflow of $147 million on Tuesday. BlackRock Bitcoin ETF (IBIT) recorded $102.8 million in redemptions and Fidelity’s FBTC saw $44.6 million in outflows. Capital rotates out of crypto into equities, precious metals, or cash.
Bitcoin ETF Outflows. Source: SoSoValueHeavy ETF outflows reduce spot buying pressure and increase leveraged liquidations amid thin futures liquidity. BlackRock looks to bring yield-generation to Bitcoin investments with iShares Bitcoin Premium Income ETF.
$8.5 Billion in Bitcoin Options Expiry
Bitcoin options with a notional value of $8.5 billion to expire on Friday, with a put-call ratio of 0.56. However, traders brace for volatility, with implied volatility dropping to an October level of 37.81.
BTC Implied Volatility. Source: TradingViewBitcoin max pain price is at $90,000. In the last 24 hours, put volume has surpassed call volumes, with a bearish put-call ratio of 1.04. Amid the bearish macro environment, options traders expect downside protection and liquidations to dominate.
Veteran trader Peter Brandt shared another sell signal in Bitcoin price, completing a bear channel. He predicts a Bitcoin price crash to $81,833, but reclaiming $93K would negate that prediction.
Source: https://coingape.com/5-reasons-why-bitcoin-price-could-crash-this-week/
