Bitcoin and Ethereum under pressure: critical trend line determines the next price movement

The crypto market is under heavy pressure on Wednesday after a week of conflicting signals. Although Bitcoin (BTC) surged to $92,000 during Asian trading hours early last week, the leading cryptocurrency ultimately retreated to $78.30K, a 5.07% decline in the past 24 hours. The technical trendline dating from the August peak now forms the critical turning point: a sustained break below would indicate that downward pressure persists.

Ethereum follows a similar pattern with an even sharper decline of 9.07%, falling back to $2.38K. While traditional safe havens like gold and silver reached record highs in January—gold surpassing $4,600 per ounce and silver reaching $84.60—cryptocurrencies have not followed this expectation. This points to fundamentally different market dynamics between crypto and classic defensive assets.

Political pressure on Powell weakens market expectations

Since it became known that federal prosecutors have launched a criminal investigation into Fed Chair Jerome Powell, focusing on his Congressional testimony regarding the $2.5 billion reform of the central bank building, interest rate expectations have shifted. Powell stated that this investigation exerts political pressure on the bank’s independence, after his refusal to aggressively cut rates as repeatedly demanded by President Donald Trump.

However, US government bond yields show strength rather than weakness. The 10-year yield is about to cross the 4.2% threshold, while the rate-sensitive 2-year yield stands at 3.54%—the highest in two weeks. This suggests that investors do not expect Powell to succumb under legal pressure. ING analysts point out that lower unemployment figures in December and likely higher inflation data this week could actually prevent the Federal Reserve from lowering rates, at least until March.

Technical analysis: trendline as a warning sign

The daily chart of Chainlink’s LINK token offers a learning moment for the entire crypto complex. Prices are currently testing the resistance of the trendline drawn from the August peak. This is no coincidence—the same resistance dynamic is playing out in large-cap coins.

For Bitcoin: a breakout above this trendline could qualify as a bullish breakout, potentially boosting demand for the coin. Conversely, failure to do so would further pressure support levels. Given the current alarming daily candles and a 5% drop in one day, many coins still remain above this critical level, but the break feels imminent.

Altcoins show selective strength despite broad market pressure

While Bitcoin and Ethereum retreat, privacy-focused coins are exhibiting defensive behavior. Monero, which reached a record high of $598 last week, has fallen back to levels where it still shows mixed 24-hour signals. Other privacy and selective risk assets such as Solana (SOL, -8.15%), Render Network (RENDER, -2.06%), ZCash (ZEC, -5.52%), and Canton Network (CC, -6.99%) show more resilience than Bitcoin, though all close in red.

XRP is holding strong with only -2.21% loss, suggesting that investors were attracted based on selective rather than broad risk appetite. This pattern is consistent with earlier observations that XRP- and SOL-ETFs continued to attract capital, while spot Bitcoin and Ethereum ETFs registered net outflows of $681 million and $69 million respectively in the period from January 5 to 9.

ETF flows and volatility patterns reveal market sentiment

The ETF data geometry tells a story of active repositioning. While Bitcoin spot ETFs and Ethereum spot ETFs lost capital, this was accompanied by increased trading volumes of $19.5 billion—not the typical noisy exit of a panic sell-off. Instead, it indicates investors are shifting their exposure profiles.

Derivative products, however, give opposite signals. The 30-day implied volatility indices for BTC and ETH hover at the lowest levels in weeks, suggesting that market participants do not expect major price explosions, neither upward nor downward. This low volatility indicator level has historically served as a springboard on both sides—and given the complex fundamentals, it’s hard to predict which way it will jump.

Regulation signals structural change in the landscape

Dubai Financial Services Authority announced last week that the revised regulations will come into effect, abolishing the recognized token list and making companies responsible for approving assets within the Dubai International Financial Centre. This step reflects global anti-money laundering standards and tightens the definition of which coins qualify as fiat-backed stablecoins.

This regulation likely undermines privacy coins in certain jurisdictions but also provides clarity for legitimate platforms. The uncertainty—how will this spread worldwide?—adds a second layer of sentiment pressure currently weighing on crypto markets.

Crypto stocks follow bearish momentum

Publicly traded crypto companies show weakness in line with spot prices. Coinbase Global closed Friday at $240.78 (-1.96%), Galaxy Digital at $24.94 (-2.20%), and CleanSpark even fell 3.17% to $11.61. Some exceptions like Core Scientific (+2.76%) and the CoinShares Valkyrie Bitcoin Miners ETF (+2.63%) showed resilience, likely supported by lower energy prices and stable hash rate signals.

MicroStrategy’s decline is noteworthy: it closed at $157.33 (-5.77%), suggesting that investors are reassessing their bitcoin exposure. This supports the theory of risk re-positioning rather than outright panic.

Looking ahead: where the trendline leads

The next two weeks will be crucial. This week’s inflation data and Fed Chair speeches could reorient the market on rate movements. Technically, investors will watch how Bitcoin behaves around critical support levels—and crucially: how the long-term trendline develops.

Given the lack of major unlock events and the high level of governance votes in alternative projects, selective activity is likely to continue. But until Bitcoin and Ethereum clearly break above their technical trendlines, many investors will remain cautious in positioning. The question is no longer “bull or bear?”—it’s “which trendline will break first?”