Bitcoin Kicks Off the Week on Unstable Footing Amid Ongoing Uncertainty

Bitcoin Attempts to Rebound Amid Global Uncertainty

After a steep decline over the weekend, Bitcoin managed to claw back some of its losses, though it remains on unstable footing as investors shift their focus to safer assets like gold due to escalating geopolitical tensions.

On Sunday, the leading cryptocurrency tumbled by up to 3.5%, briefly touching a 2026 low just above $86,000 before recovering slightly. By 6:15 a.m. Monday in New York, Bitcoin was trading near $87,883, marking a 1.6% increase over the previous 24 hours. Ether also experienced a sharp drop of 5.7% before bouncing back, but it continues to hover near its lowest point since mid-December.

Martin Gaspar, a senior analyst at FalconX, noted, “Even though the setup appears more favorable, Bitcoin continues to face challenges from a broader economic backdrop that currently benefits gold and other commodities.”

The US dollar weakened to its lowest level in four months on Monday, extending its decline for a third straight session. Meanwhile, gold surged past $5,000 per ounce for the first time ever.

Bitcoin is frequently described as a digital counterpart to gold, with advocates touting it as a hedge against inflation and a substitute for the precious metal. Nations such as El Salvador and Venezuela have accumulated significant reserves of Bitcoin.

According to Bloomberg data, US-based spot Bitcoin exchange-traded funds experienced five days of consecutive outflows last week, totaling $1.7 billion and nearly erasing gains from the previous four days of inflows.

Market sentiment has been dampened by a range of geopolitical issues, including former President Donald Trump’s proposal for 100% tariffs on Canadian imports, reports of a substantial US naval presence moving toward Iran, and increasing chances of another US government shutdown, according to IG Australia analyst Tony Sycamore.

Traders also entered the week alert to the possibility of Japanese intervention following the yen’s recent decline, as well as news of China’s largest military leadership shakeup in fifty years.

Looking ahead, attention is turning to the Federal Reserve’s upcoming interest rate announcement and press conference on Wednesday. Simon Peters, a crypto analyst at eToro, commented, “With US inflation still above the target and showing no signs of decreasing, the expectation is that the Fed will maintain current rates. However, investors will be watching closely for any indications of future rate cuts or a shift in the inflation outlook.”

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