Iliya Kalchev, dispatch analyst for Nexo, also pointed to various causal factors when explaining bitcoin’s recent price movements.

“Bitcoin’s weekend dip toward the mid-$86,000s was driven by a convergence of macro repricing, sustained ETF outflows, cross-asset capital rotation, and thin weekend liquidity,” he stated via email.

“The initial pressure came from stronger U.S. economic data, which pushed expectations for Federal Reserve rate cuts further out,” said Kalchev, who highlighted speculation surrounding central bank policy.

“Markets now assign roughly a 97% probability to no Fed rate cut this week, while expectations for a March cut have declined to around 15.6% from about 20% a week ago,” he added.

The members of the Federal Open Market Committee are scheduled to meet January 27 and 28, after which they will announce any change in policy.

“Bitcoin has historically been quick to price in developments perceived as negative for its liquidity outlook, and the reduced odds of near-term easing prompted a rapid reassessment of positioning rather than a gradual decline,” stated Kalchev.

“That reassessment has been visible in U.S. spot Bitcoin ETFs, which recorded persistent outflows in recent sessions,” he said, noting the exact same development highlighted by Diwan.

Potential U.S. Government Shutdown

Another factor analysts cited as contributing to bitcoin’s drop over the weekend was the potential threat of a U.S. government shutdown, a development they described as roiling market sentiment and fueling greater risk aversion.

On January 22, the U.S. House of Representatives voted to send the $1.2 trillion appropriations bill to the Senate, according to a USA Today article. At the time, many of the provisions contained benefited from bipartisan support.

However, the situation has changed, as members of the democratic party have been requesting that the republicans remove the portion of the appropriations that would fund the Department of Homeland Security, which controls Immigration and Customs Enforcement (ICE).

Marc P. Bernegger, cofounder of crypto fund of funds AltAlpha Digital, spoke to the impact of these developments, stating via email that the threat of a government shutdown contributed to “renewed macro caution,” which was in turn reflected in bitcoin’s drop to roughly $86,400 over the weekend.

Patrick Liou, director of institutional at Gemini, also commented on the situation, clarifying through emailed commentary that “market risk sentiment has been pulled lower by concerns about a potential partial U.S. government shutdown tied to political fallout and budget disputes in Washington, which adds to market uncertainty.”

Liquidity Amplifier

Once markets started moving lower, thin liquidity intensified such price movements, according to several analysts who provided input for this article.

“With fewer institutional participants active, thinner order books allowed relatively modest sell pressure to push prices lower than would typically occur during peak liquidity,” stated Kalchev.

“At the ±2% level, Bitcoin market depth remains asymmetric, with sell-side liquidity exceeding buy-side bids near spot, reinforcing a range-bound and liquidity-constrained trading environment where near-term upside appears more limited,” he continued.

“Importantly, the move did not escalate into a broader unwind. Futures open interest, at around $40 billion, remains well below mid-2025 highs, indicating that leverage has not rebuilt to aggressive levels,” the analyst noted.

“Funding rates have stayed broadly neutral, suggesting the decline reflected fast repricing and position trimming rather than a shift toward sustained bearish leverage. Overall, the pullback looks like a liquidity-driven adjustment during a macro and allocation reshuffle, not a breakdown in market conviction,” he stated.

“Whether the move extends will depend largely on ETF flow dynamics and how quickly broader risk appetite stabilizes.”