Bitcoin (BTC) Price Stumbles Ahead of Macroeconomic Data Despite Crypto Positives

Despite several crypto positives in the past week, from the SEC's shifting regulatory stance to President Donald Trump's establishment of a crypto working group, Bitcoin is in the red ahead of the new week.

Bitcoin is trading in the red on Monday, January 27, with the apex cryptocurrency down 7% from Sunday’s highs.

At the time of writing, BTC is trading around $98,600, a significant drop from Sunday’s highs of about $105,500.

This price action comes amid several market jitters and macroeconomic developments expected this week.

Bitcoin price dropped on Monday as traders reacted to several macroeconomic developments. / Image via CryptoSlate

Bitcoin Price Drops as Interest Rate Decision Looms

These developments include the U.S. interest rate decision following the Federal Open Market Committee (FOMC) Meeting, the ECB interest rate decision, and the U.S. Personal Consumption Expenditure index, slated for release on Wednesday, Thursday, and Friday, respectively.

Bitcoin’s price reaction suggests that traders are taking profits and erring on the side of caution ahead of these releases.

Economists do not see these major central banks turning dovish just yet. Per TRADING ECONOMICS forecasts, both the Federal Reserve and the European Central Bank could maintain current interest rates as they continue to target 2% inflation.

This outlook could keep investors cautious and risk-averse, especially regarding assets like Bitcoin in the short term.

Complicating the outlook further is the month-on-month core PCE index, which economists predict will see a 0.1% uptick to 0.2%.

This outlook could bolster the Fed’s confidence in keeping rates steady or even considering a hike, as some have recently alluded to.

Speaking on a panel at the World Economic Forum in Davos, Switzerland, on Friday, January 24, BlackRock CEO Larry Fink said there was a possibility of a rate hike in the coming year.

Fink argued for such an outcome, citing the continued resilience of the U.S. economy and the bond market.

The BlackRock chief is not the first to express this view. Following higher-than-expected jobs numbers released earlier in the month, Bank of America said that the Fed was now more likely to raise rates than continue cutting.

Beyond interest rate concerns, recent speculation that the U.S. AI sector is overvalued may also be driving risk-off sentiment, which could be spilling over into the Bitcoin market.