Bitcoin Falls to $83K After Fed Halts Rate Cuts — Relief Bounce or More Pain Ahead?

Bitcoin plunged below $85,000 on January 28th after the Federal Reserve announced a pause on interest rate cuts. The cryptocurrency traded at $84,933, marking a 5.21% decline in 24 hours. Over $430 million in crypto positions were liquidated within 60 minutes of the announcement.

The market-wide selloff wiped nearly $100 billion from total crypto capitalization. Ethereum and Solana each dropped more than 5% during the same period. Long positions bore the brunt of the damage, with $104.84 million liquidated compared to just $1.6 million in shorts.

Bitcoin ETFs recorded significant outflows, losing 37 BTC worth $3.12 million in daily net flow. Weekly ETF outflows totaled 3,272 BTC, equivalent to $276 million, according to Lookonchain data. The cascade of selling pressure pushed BTC to one of its sharpest resets this cycle.

Jan 29 Update:#Bitcoin ETFs:
1D NetFlow: -37 $BTC(-$3.12M)🔴
7D NetFlow: -3,272 $BTC(-$276M)🔴#Ethereum ETFs:
1D NetFlow: +7,816 $ETH(-$21.92M)🟢
7D NetFlow: -1,945 $ETH(-$5.46M)🔴#Solana ETFs:
1D NetFlow: +41,404 $SOL(+$4.84M)🟢
7D NetFlow: +135,115 $SOL(+$15.81M)🟢 pic.twitter.com/naYVgoBOBY

— Lookonchain (@lookonchain) January 29, 2026

Fed’s Rate Pause Rattles BTC Markets

Federal Reserve Chairman Jerome Powell confirmed the pause after three consecutive rate cuts in late 2024. The decision aligned with market expectations, but accompanying commentary raised concerns among investors.

🚨 FOMC FED DECISION IS OUT:

THE FED HAS FINALLY PAUSED AFTER 3 CONSECUTIVE RATE CUTS.

THIS WAS SOMETHING THE MARKETS HAD ALREADY PRICED IN, BUT HERE'S WHAT'S ALARMING:

• THE FED THINKS THE JOB MARKET IS STARTING TO STABILISE, WHILE INFLATION CONCERNS ARE STILL HIGH.

• THE… pic.twitter.com/antms3BXm0

— Coinwaft (@coinwaft) January 29, 2026

The Fed cited a stabilizing job market alongside persistent inflation worries. Officials reiterated their commitment to achieving 2% inflation, a target that remains unmet. Economic uncertainty was flagged as elevated, adding to cautious sentiment.

Meanwhile, broader macroeconomic pressures compound the uncertainty. President Trump announced new tariffs, the dollar weakened, and bond markets experienced selling pressure. A potential government shutdown looms on the horizon.

Analysts interpret the Fed’s stance as signaling no rate cuts in the near term. This removes a key bullish catalyst that many crypto traders had anticipated for 2025.

BTC Selloff Reflects Structural Cleanup, Not Panic

Crypto market participants view the selloff as a structural cleanup rather than panic-driven capitulation. Elevated open interest and crowded positioning created thin liquidity conditions. Key support levels broke, triggering a rapid cascade of liquidations.

The $85,000 level now serves as the primary battleground for bulls and bears. Holding above this zone suggests potential consolidation. A clean breakdown opens the door to liquidity sweeps toward $82,000 or even $80,000.

Long-term holder selling appears to reflect profit-taking at strength, not conviction-driven exits. According to Glassnode, on-chain data points to leverage being punished rather than organic demand disappearing. Funding rates are cooling as stops get cleared across derivatives markets.

Analyst Ted Pillows noted that $140 million in spot bids sit stacked between $80,000 and $84,000. He warned that if this support fails, BTC could drop directly toward April 2025 lows.

In a potentially bullish development, SEC Chair Paul Atkins stated now is the right time to open the $12.5 trillion 401(k) market to crypto investments.

🚨 JUST IN: SEC CHAIR ATKINS SAYS NOW IS THE RIGHT TIME TO OPEN THE $12.5T 401(K) MARKET TO CRYPTO. pic.twitter.com/hk8YUv6Fkc

— Coinwaft (@coinwaft) January 29, 2026

BTC Price Battles Key Support Levels

Bitcoin trades at $84,994 in a corrective consolidation phase following the drawdown from $120,000. The price hovers near the lower Bollinger Band at $84,575, with the 20-day SMA at $91,073 acting as immediate resistance.

The upper Bollinger Band sits at $97,571, aligning with major psychological resistance at $100,000. Price has repeatedly failed to reclaim the mid-band, signaling bearish control of the current structure.

From a Fibonacci perspective, BTC struggles at the shallow 23.6% retracement level near $90,800. Failure to reclaim this level typically signals weak corrective bounces rather than healthy uptrends.

Key support levels include $84,574 at the lower Bollinger Band and $80,000 as secondary support. A breakdown below these zones targets the December panic low between $74,000 and $76,000.

The Vortex Indicator shows VI+ at 1.2313 above VI- at 0.6788, suggesting short-term bullish pressure. However, previous VI+ signals failed to produce sustained rallies, indicating relief bounces within a range rather than trend reversals.

Volume analysis reveals declining participation on rallies and high volume on declines. This pattern suggests distribution rather than accumulation. Institutions appear to be reducing exposure on bounces.

The overall bias remains neutral-to-bearish. Bulls must reclaim the $91,000 mid-band level to shift momentum. A sustained breakdown below $84,500 would likely accelerate the downtrend toward the $80,000 support zone.