Bitcoin faces significant downward pressure this week, with its value declining sharply. The current price slump stems from a combination of record-setting capital withdrawals from U.S. spot ETFs and renewed uncertainty surrounding future U.S. monetary policy. As institutional investors de-risk on a large scale, attention is turning to critical support levels, a breach of which could trigger additional selling.
Monetary Policy Uncertainty Weighs on Sentiment
A key catalyst for the current risk-off mood is a personnel decision by U.S. President Donald Trump. His announcement to nominate former Federal Reserve Governor Kevin Warsh as a successor to current Chair Jerome Powell has unsettled markets. Warsh is viewed as an advocate for tighter monetary policy and a reduction of the Fed’s balance sheet.
Strategists, including Damien Boey of Wilson Asset Management, see this as a headwind for asset classes traditionally used as hedges against expansive monetary policy. When the central bank’s balance sheet contracts, assets like gold, bonds, and Bitcoin lose one of their core macroeconomic rationales.
ETF Sector Shows Historic Withdrawals
The selling pressure is most evident in the ETF space. Data from SoSoValue reveals that investors pulled a staggering $817.9 million from U.S.-listed Bitcoin spot ETFs on January 29 alone—marking the highest single-day outflow since November 2025. Combined with outflows from Ethereum products, nearly $1 billion exited crypto funds in just one day.
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The industry’s largest funds were particularly impacted: BlackRock’s IBIT saw outflows of nearly $318 million, followed by Fidelity’s FBTC with $168 million. Market observers interpret these synchronized sales across various products as a sign that institutional investors are broadly reducing their crypto exposure, rather than merely reallocating capital. Bitcoin currently trades at $82,781, precisely at its 52-week low.
Regulatory Developments Offer a Glimmer of Hope
Despite the bleak price action, positive signals are emerging from Washington. The U.S. Senate Agriculture Committee has passed a draft bill concerning the market structure for cryptocurrencies. This marks the first time such legislation has cleared this parliamentary hurdle. The bill would grant the Commodity Futures Trading Commission (CFTC) oversight of spot markets—a move long demanded by the industry to establish clear rules. In a related development, the SEC and CFTC signaled closer coordination during a joint meeting, which could ultimately facilitate entry for large institutional investors like pension funds.
Critical Chart Levels Under Scrutiny
In the short term, however, technical analysis dominates the narrative. After falling below the $84,000 support level, analysts are warning of further downside potential. Experts like Matt Mena of 21Shares and John Glover from crypto lender Ledn identify zones around $80,000 and, in a worse-case scenario, $71,000 as the next potential areas of support. Some counterbalance to the selling pressure may come from major players like Binance, which has announced plans to reallocate its multi-billion dollar Secure Asset Fund for Users (SAFU) into Bitcoin.
The near-term market environment remains challenging, as Bitcoin is currently correlating more like a highly volatile risk asset than the oft-cited “digital gold.” Investors will need to watch closely in the coming days to see if the psychologically important $80,000 level holds and how the Senate Banking Committee proceeds with the new draft legislation.
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