Crypto Markets Retreat Amid Macro Uncertainty: BTC, ETH Pressured As US Fiscal And Geopolitical Risks Mount

Singapore-based digital asset firm QCP Capital released a market report providing its outlook for the sector. According to the firm, cryptocurrency markets traded in a narrow range over the weekend before coming under pressure during early Asian hours, prompting more than $550 million in liquidations of leveraged long positions. 

Bitcoin briefly tested the 86,000 level before finding support, while Ethereum declined toward the 2,785 area. In contrast, traditional safe-haven assets continued to perform strongly, with both gold and silver extending recent gains.

The pullback in cryptocurrencies appears to have been driven by a combination of macroeconomic factors. These include remarks from President Donald Trump suggesting the possibility of 100% tariffs on Canadian imports, renewed concerns over a potential partial US government shutdown, and ongoing uncertainty about whether the United States and Japan might intervene to stabilize the yen.

The New York Federal Reserve’s “rate check” on the USD/JPY on Friday, while likely intended as a cautionary signal rather than an immediate policy action, highlighted sensitivity to excessive yen depreciation, with the 160 level serving as an implicit threshold. Even so, USD/JPY remained near two-month highs around 154, reflecting a defensive shift as investors unwound short-yen positions rather than risk exposure ahead of potential intervention.

Political risk in the United States continues to weigh on markets. Although Canadian Prime Minister Mark Carney clarified that Canada does not plan to pursue a free trade agreement with China, uncertainty surrounding US fiscal negotiations is mounting. House Republicans have advanced spending bills allocating roughly $64.4 billion to the Department of Homeland Security and border security, while Senate Democrats have indicated they will block the measures. 

With government funding set to expire on January 30th, failure to reach a bipartisan deal would trigger a partial federal government shutdown, echoing the protracted fiscal standoff last autumn that coincided with a sharp drawdown in cryptocurrency markets. Current market probabilities, such as those reflected by Polymarket, indicate roughly a three-quarters chance of a shutdown by January 31.

Reflecting these risks, cryptocurrency derivatives markets have adopted a more defensive stance, with put skew and implied volatility rising across maturities. Notable flows included the roll-down of long Bitcoin 30JAN26 88,000 puts into 85,000 strikes.

Looking ahead, QCP Capital notes that volatility is likely to remain elevated amid a dense calendar of macroeconomic events. Investors will be monitoring ongoing geopolitical and fiscal developments, major technology earnings, and the Federal Reserve’s policy decision on Wednesday. 

While the entity is widely expected to hold interest rates steady, markets will be attuned to Chair Jerome Powell’s guidance on future policy. In the near term, cryptocurrency prices are likely to remain range-bound, with the risk of a US government shutdown and other unresolved macro risks continuing to influence market behavior.

Bitcoin And Ethereum Dip Amid ETF Outflows As Crypto Market Faces Narrow Trading Range 

Bitcoin is currently trading at $87,679, reflecting a modest decline of just over 0.69% in the past 24 hours. The cryptocurrency reached an intraday high of $88,831 and a low of $86,166 during this period. 

Ethereum is currently priced at $2,889, reflecting a decrease of approximately 1.47% over the past 24 hours. During this period, the cryptocurrency reached an intraday high of $2,941 and a low of $2,786, indicating notable intraday volatility within a relatively narrow trading range.

The total market capitalization of all cryptocurrencies stands at $2.96 trillion, marking a 0.98% decrease over the same timeframe, while 24-hour trading volume surged to $125.95 billion, representing a remarkable 122.32% increase, according to CoinMarketCap data.

Data from SoSoValue highlights additional pressure on US spot bitcoin exchange-traded funds (ETFs), which recorded their weakest week since February 2025, posting $1.33 billion in net outflows across a shortened four-day trading session. BlackRock’s IBIT, the largest spot bitcoin ETF by assets, experienced outflows on each of the four trading days, with the heaviest redemptions occurring on Tuesday and Wednesday, driving a substantial portion of the weekly decline. The fund currently manages approximately $69.75 billion in net assets, representing around 3.9% of the total bitcoin supply.

Despite these recent outflows, the broader trend for US spot Bitcoin ETFs since their January 2024 debut remains positive, with cumulative net inflows totaling $56.5 billion and total assets under management at roughly $115.9 billion, reflecting continued investor interest in regulated bitcoin investment vehicles.

Spot Ethereum exchange-traded funds experienced a reversal similar to their Bitcoin counterparts, recording $611 million in net outflows over the past week. This shift follows a previous week that saw $479 million in net inflows, fueled by strong performance from BlackRock’s ETHA and Grayscale funds. Total assets under management for Ethereum ETFs now amount to roughly $17.7 billion, with cumulative net inflows since the launch of these products in July 2024 reaching $12.3 billion.

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