Behind Bitcoin's $91,000 fluctuation: How interest rate cut expectations are reshaping liquidity dynamics

Following the strong rally at the beginning of January, Bitcoin and Ethereum experienced a phased correction. However, this is not a bear market signal but a liquidity reallocation driven by expectations of Fed rate cuts. Although short-term prices are under pressure, the macro environment’s support for crypto assets remains clear, and the key is to understand the real logic behind this correction.

Phenomenon Observation: Structural Differentiation During the Correction

As of January 8, Bitcoin hovered around $91,000, with the market showing a noticeable short-term adjustment. Specifically:

The key insight behind this data is: although there is a short-term across-the-board correction, the weekly chart remains bullish, and market preference for high-elasticity assets (like Dogecoin) has not diminished. This indicates that the correction is not a trend reversal but a normal digestion within a new expectation framework.

Transmission Chain of Rate Cut Expectations

The shift in Federal Reserve policy has become the core driver of this correction, with a clear transmission path:

Economic data releases signal easing

In December, US private sector employment added only 41,000 jobs, below the market expectation of 50,000. This soft data reinforced market bets on Fed rate cuts within the year. Meanwhile, the 10-year US Treasury yield fell back to about 4.14%, with bond markets strengthening, reflecting traders’ reassessment of easing policies.

Policy confirmation

Fed Governor Mester stated on January 6 that she expects the Fed to cut rates by more than 100 basis points this year. The interest rate futures market briefly re-priced the possibility of “at least two rate cuts of 25 basis points each within the year.” This warming of policy expectations directly changed market perceptions of liquidity conditions.

Restructuring of liquidity environment

Under easing expectations, capital faces a key decision: the attractiveness of cash and low-yield assets (like US Treasuries) diminishes, while high-risk, high-volatility assets such as Bitcoin and Ethereum become relatively more valuable. B2BINPAY analysts note that crypto assets are still fundamentally viewed as risk assets, with their performance highly dependent on macro liquidity and market sentiment.

Why the correction does not equal a trend reversal

The current short-term correction should be understood as two layers of meaning:

Necessary technical digestion

After the strong rally at the start of the year, the market needs to digest profit-taking and reallocation pressures. Post-holiday trading resumes, and the phased rebound in demand for traditional assets will test Bitcoin’s price. Such corrections are common and necessary within an upward trend.

Continued macro support

Expectations of rate cuts, liquidity expansion, geopolitical risks (gold rising above $4,500), and other factors continue to support crypto assets. This is different from the short-term decline after the Fed’s “hawkish rate hikes” at the end of 2025 — which was a classic “buy the rumor, sell the fact” correction. Now, it is a normal adjustment within a new easing expectation framework.

Subtle Changes in Institutional Attitudes

From related information, it can be seen that institutional investors are not pessimistic about the short-term correction. Arthur Hayes’s Maelstrom fund entered 2026 with “almost maximum risk exposure,” mainly focusing on risk assets and altcoins, indicating that large asset management institutions remain optimistic about the long-term prospects of the crypto market. This “aggressive long” stance contrasts with the market’s short-term cautious sentiment, implying institutions are positioning during the correction.

Focus for Follow-up Attention

From the current macro environment, several factors warrant ongoing attention:

• Fed Chair Candidate: The current chair’s term ends in May 2026. The new chair’s policy stance will profoundly influence the liquidity environment for the year.
• Non-farm Payroll Data: Future employment reports will further validate the reasonableness of easing expectations.
• Trump Tariff Policies: Geopolitical and trade policy uncertainties may boost safe-haven demand for risk assets.

Summary

Bitcoin’s correction around $91,000 is essentially a normal manifestation of liquidity reallocation amid rising expectations of Fed rate cuts. Although short-term prices are under pressure, the weekly chart remains bullish, and institutions are still increasing positions in high-risk assets. These all indicate that the trend has not reversed.

The key insight is: the market has recovered from the shock of “hawkish rate hikes” and is beginning to reprice the easing cycle. The short-term volatility and corrections are actually necessary digestion periods before the next market phase. For investors, understanding macro drivers (rate cut expectations and liquidity expansion) is more important than chasing short-term fluctuations. Under the liquidity-driven macro framework, the relative value of high-risk assets continues to rise.