📉 Bitcoin Slips Below $89,000 as Fed Hawkishness and Middle East Tensions Drain Risk Appetite

Bitcoin’s latest recovery attempt has fizzled out.

After briefly stabilizing, the world’s largest cryptocurrency has fallen back below the $89,000 mark, underscoring a market struggling to regain confidence as tighter financial conditions and rising geopolitical stress keep investors on edge.

What’s unfolding now isn’t just a routine pullback — it’s a broader retreat from risk.

According to Samer Hasn, Senior Market Analyst at XS.com, the pressure on Bitcoin reflects a toxic mix of hawkish-leaning central bank policy and growing unrest in the Middle East.

In comments shared with Cryptonews.com, Hasn said investor sentiment has weakened as markets come to terms with a Federal Reserve that shows little urgency to cut interest rates, even as global uncertainty intensifies.

“The crypto space is seeing its speculative fire extinguished by a lack of fresh capital,” Hasn said, noting that gold and silver — not digital assets — are benefiting from the current flight to safety.

Behind the price action, derivatives data paints an even more concerning picture.

Figures from CoinGlass show that crypto futures open interest has plunged 42% from record highs, a clear sign that traders are pulling back rather than doubling down.

Every attempted rally is being met with aggressive selling.

Instead of building momentum, bullish moves are quickly reversed as traders rush for the exits at the first hint of trouble — a hallmark of a fragile market structure where confidence is in short supply.

Institutional investors, often viewed as Bitcoin’s stabilizing force, are also showing signs of caution.

Data from SoSoValue reveals that Bitcoin spot ETFs have recorded $160 million in outflows over the past three trading sessions. Rather than buying the dip, large players appear content to wait on the sidelines.

The message from institutions is clear: uncertainty is too high, and patience is preferable to risk.

The Federal Reserve remains a central obstacle.

Chair Jerome Powell recently signaled that rate cuts are not imminent, keeping benchmark rates in the 3.5% to 3.75% range. Former Fed economist William English echoed that view, suggesting policymakers are unlikely to move unless the labor market deteriorates meaningfully.

Hasn also pointed to political friction within the Fed itself, highlighted by two dissenting votes from Trump-appointed officials, as an unusual source of uncertainty.

“Markets rarely enjoy internal friction at the Fed,” he said, “and this only complicates the outlook for risk assets.”

Beyond monetary policy, geopolitics are playing an increasingly influential role.

Rising tensions following a US naval deployment toward Iran have intensified risk aversion, pushing investors toward traditional havens like gold and silver — while Bitcoin is being left out of the safety trade.

“This flight to safety is bypassing Bitcoin entirely,” Hasn said.
“Until the geopolitical dust settles or the Fed turns the liquidity taps back on, Bitcoin remains a high-risk play in a world looking for a bunker.”

As previously reported, Bitwise CIO Matt Hougan believes the current environment could prove pivotal for digital assets.

With gold surging past $5,000 an ounce and uncertainty mounting around US crypto legislation, Hougan warned that confidence in regulatory clarity is fading just as demand for assets outside government control is rising.

He also flagged growing doubts around the Clarity Act, a bill designed to solidify a pro-crypto regulatory framework in the US — adding another layer of hesitation for investors already grappling with macro and geopolitical risks.

Bitcoin’s slide below $89,000 is more than a technical stumble. It reflects a market caught between hawkish central banks, institutional caution, geopolitical stress, and fading speculative appetite.

Until liquidity improves or uncertainty eases, crypto’s role as a risk asset — not a safe haven — remains firmly in focus.