Bitcoin steadied after a sharp pullback as U.S. political headlines briefly eased pressure on risk assets, though traders remain cautious amid lingering macro and policy uncertainties.
The world’s largest cryptocurrency slipped to around $72,900, its lowest level since the post-election rally, before rebounding after the U.S. House narrowly passed a $1.2 trillion funding package that ended a partial government shutdown. The vote removed an immediate source of market anxiety and helped crypto prices claw back losses, with Bitcoin now testing whether it can regain acceptance above $75,000.
Funding vote lifts sentiment, volatility lingers
The selloff into the lows flushed leverage from the market. Futures open interest fell sharply during the decline, while perpetual funding rates flipped negative as traders rushed to hedge or exit positions. That positioning reset helped stabilize prices once shutdown fears eased.
Still, the relief may prove temporary. Homeland Security funding was only extended through February 13, leaving another political deadline looming. In parallel, oil prices are rebuilding a modest geopolitical premium after reports that the U.S. shot down an Iranian drone near the USS Abraham Lincoln in the Arabian Sea, adding another layer of uncertainty for broader risk sentiment.
Fed politics and options signal caution
Attention is also turning back to U.S. monetary policy. Former President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair has reintroduced policy uncertainty into markets. While expectations of deeper rate cuts later in the year could support risk assets, Warsh’s known preference for faster balance sheet reduction has revived concerns around liquidity and money-market stress.
Crypto derivatives reflect that unease. Short-dated implied volatility remains elevated even as spot prices bounce, with the options curve edging toward backwardation. Downside skew has steepened, suggesting traders are still paying up for protection against sharp moves lower.
Meanwhile, BTC remains range-bound heading into Christmas week, even as gold hits fresh all-time highs, according to QCP Asia.
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