The recent wave of hedge fund selling of BTC may be coming to an end. In the past few weeks, both funding rates and base rates have fallen, while CME BTC open interest has decreased significantly. Market selling pressure has now been largely exhausted, and BTC is in a consolidation phase.

The Federal Reserve has become an important factor in determining the direction of BTC

The topping process for BTC began with stronger-than-expected US jobs data in early December 2024, which initially weakened the momentum of altcoins. BTC then reached its peak at the hawkish Federal Reserve (FOMC) meeting in mid-December. Although BTC tried to rebound again before Trump's inauguration, the collapse of Trump's meme coin launched a few days ago caused the entire meme coin bull market to begin to ebb. This series of events led to the formation of altcoins, BTC, and meme coins, pushing BTC into the current consolidation phase. The Federal Reserve has now become a key factor in determining whether BTC will break out of this range or face a deeper adjustment.

While this week’s Fed meeting may not be dovish enough to drive a big rally in BTC and altcoins, it does mark a slight pivot. Chairman Powell said the Fed will “ignore” the recent rise in inflation expectations and does not believe that Trump’s tariffs will lead to persistently high inflation. The Fed will take a wait-and-see approach rather than respond to these inflationary pressures with rate hikes. While growth expectations have been lowered, the Fed will tolerate temporary inflation risks. Combined with the slowdown in quantitative tightening, the tone of this meeting can be interpreted as mildly dovish.

BTC big holders become the dominant group in the market, and BTC's structural pressure-bearing capacity increases

Since Trump’s election in November 2024, a clear trend has emerged: wallets holding 100 to 1,000 BTC (worth about $8 million to $80 million) have become the dominant group. This may reflect the long-term accumulation of BTC by family offices and wealth managers, especially as regulatory clarity improves. This structural shift is one of the key reasons why we no longer expect the extreme 70-80% retracements of past BTC cycles.

BTC price has been trading below its 21-week moving average for the past three weeks. Combining the 21-week moving average and the short-term holder indicator, $90,000 can be seen as a critical turning point that could determine whether BTC continues to be in a bull or bear market.

Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.