Bitcoin has erased gains from earlier this month, slipping below the $88,000 mark on Monday. The cryptocurrency market has been bearish for the last three weeks, and this week started with more losses. Over $100 billion was wiped from the overall crypto market on Sunday alone as events in the United States shook investor confidence.
US Government shutdown concerns weigh on Bitcoin
Bitcoin fell 2 percent on Sunday, reaching $86,000 and filling the Fair Value Gap on the 4-hour chart from December 19. Analysts say the drop is linked to rising fears of another US government shutdown. Funding uncertainty and political deadlock in Congress have created tension, with Democratic lawmakers threatening to block a Department of Homeland Security funding bill after controversies over federal law enforcement.
If a shutdown occurs, it would follow the longest government shutdown in US history, which lasted six weeks. Investors are also watching the upcoming Federal Reserve interest rate decision. A government shutdown could make it difficult for the Fed to cut rates, as the central bank would lack key economic data.
Bitcoin recovers slightly but the market remains bearish
After Sunday’s dip, Bitcoin bounced back and is now trading above $87,800. Despite the rebound, momentum indicators remain bearish. In the last 24 hours, $744 million in leveraged positions were liquidated, including $580 million in long positions and $164 million in shorts.
The 4-hour BTC/USD chart shows that Bitcoin failed to rally toward the $91,600 resistance and dropped below the $87,000 support over the weekend. The Relative Strength Index on the daily chart sits at 39, signaling ongoing bearish momentum. The MACD also shows a bearish crossover from last week, suggesting the downtrend may persist.
If Bitcoin manages to close its daily candle above $87,878, it could attempt a recovery toward $90,000. However, failure to break above this level could push BTC below $85,569, coinciding with the 78.6 percent Fibonacci retracement.
On the broader view, Bitcoin remains in a choppy market with no clear short-term direction. Investors are keeping a close eye on macroeconomic developments and political risks in the United States, which are likely to continue influencing crypto prices.
