Analysis: Bitcoin's difficulty in breaking $90,000 may be due to the Federal Reserve's balance sheet reduction drying up market liquidity.

Odaily Planet Daily reports that Bitcoin failed to hold the key $92,000 price level over the past month and is currently hovering below $90,000. Some traders believe the recent price decline is due to market manipulation, while others attribute it to increased market concerns about the artificial intelligence industry. However, analysts believe a significant factor limiting Bitcoin's price increases is the Federal Reserve's plan to shrink its balance sheet for most of 2025. This move has drained liquidity from financial markets. Although there are clear signs that the Fed is shifting towards a more accommodative monetary policy, traders are uncertain whether the Fed can lower interest rates below 3.5% in 2026. With investor risk aversion rising, Bitcoin is unlikely to serve as a hedge in the short term. (Bloomingbit)