Fed’s Hawkish Tone, Market Patterns Suggest Bitcoin Could Face Turbulence Ahead

Bitcoin’s (BTC) rally to surpass $90,000 has hit a roadblock, as fresh market signals hint at potential headwinds. Deribit options data shows a shift in sentiment resembling trends that preceded a sharp drop in Trump Media shares earlier this month, fueling speculation of a similar outcome for the leading cryptocurrency.

The implied probability distribution—a model that captures traders’ expectations for an asset’s future price—now leans more heavily toward downside risk for bitcoin, according to BloFin, a crypto financial platform.

“Implied probability distributions for BTC options have shifted leftward, a signal we’ve seen before major price corrections,” said Griffin Ardern, head of options trading at BloFin, in a note to CoinDesk. “This echoes the setup in DJT shares, where optimism gave way to a sharp decline following their October peak.”

Trump Media shares (DJT) rallied to $54 in late October on optimism surrounding Donald Trump’s pro-crypto policies and his electoral victory but have since plummeted to $27. Similarly, bitcoin surged to a record $93,000 shortly after Trump’s win, reflecting optimism about his administration’s proposed BTC-focused policies. However, the cryptocurrency has since slipped to $88,100 as of Friday morning.

The market’s hesitation is compounded by recent hawkish comments from Federal Reserve Chair Jerome Powell. Speaking on Thursday, Powell stressed the economy’s resilience, stating, “There’s no need to rush into rate cuts,” a move that dampened hopes for quicker monetary easing. Since September, the Fed has implemented 75 basis points in rate reductions, which had been a key driver of risk-on sentiment across markets.

Despite the short-term uncertainty, the long-term outlook for bitcoin remains positive, with many traders placing bullish wagers on the cryptocurrency surpassing the $100,000 mark. “The structural shift in market sentiment surrounding BTC, driven by Trump’s crypto-friendly stance, is still intact,” Ardern added, underscoring the potential for further gains once near-term volatility subsides.