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Davit Cho
CEO & Crypto Tax Specialist | LegalMoneyTalk
Published: January 30, 2026 | 12 min read
๐ง davitchh@proton.me
Fed Holds Rates — BTC Fails $90K Test ๐
๐ Table of Contents
The Federal Reserve delivered its first monetary policy decision of 2026 on January 28, choosing to hold interest rates steady at 3.5%-3.75%. Bitcoin briefly rallied toward $90,000 ahead of the announcement but quickly reversed course, dropping back to the $88,000 level as Chair Powell's press conference dampened hopes for near-term rate cuts.
The cryptocurrency market now faces a challenging confluence of factors. Beyond the Fed's hawkish stance, Bitcoin's network hashrate experienced its largest single decline in history this week, dropping approximately 40% due to a severe winter storm affecting U.S. mining operations. In my view, this combination of macro headwinds and infrastructure disruption creates significant near-term uncertainty for crypto investors.
๐️ Fed Keeps Rates at 3.5%-3.75%
The Federal Open Market Committee (FOMC) concluded its two-day meeting on January 28, 2026, with a decision to maintain the federal funds rate in the target range of 3.5% to 3.75%. This outcome matched market expectations, with CME FedWatch showing a 98% probability of no change heading into the meeting. The decision came via a split vote rather than unanimous consensus.
The rate hold follows three consecutive cuts in late 2025 that brought rates down from their cycle peak. The Fed appears to be entering a pause period to assess the cumulative impact of previous easing measures on the economy. Inflation remains above the 2% target, giving policymakers reason for caution about further cuts.
The FOMC statement emphasized the resilience of the U.S. economy while acknowledging ongoing uncertainties. Labor markets remain strong with unemployment near historic lows. Consumer spending has held up despite higher borrowing costs. These factors support the Fed's patient approach to additional rate adjustments.
Market participants had hoped for more dovish language signaling cuts later in 2026. Instead, the statement maintained a data-dependent stance that leaves the timing of future moves uncertain. This ambiguity disappointed risk asset investors who had positioned for a more accommodative tone.
๐ FOMC January 2026 Decision Summary
| Metric | Detail |
|---|---|
| Rate Decision | Hold at 3.5%-3.75% |
| Vote | Split decision (not unanimous) |
| Economic Assessment | "Firm footing" |
| Inflation Stance | Above 2% target |
| Forward Guidance | Data-dependent |
The split vote deserves attention as it suggests some FOMC members may have preferred a different outcome. Typically, Fed decisions aim for unanimity to project confidence and clarity. A divided committee indicates genuine debate about the appropriate policy path, which could create volatility around future meetings.
Looking ahead, the next FOMC meeting is scheduled for March 2026. Markets currently price in approximately two rate cuts for the full year, though this expectation could shift based on incoming economic data. Any acceleration in inflation or unexpected strength in employment could push rate cut expectations further into the future.
The Fed's balance sheet reduction continues in the background. Quantitative tightening drains liquidity from financial markets, creating headwinds for risk assets including cryptocurrency. The combination of steady rates and ongoing QT maintains a restrictive overall policy stance despite the rate cuts delivered in late 2025.
⚡ Fed decisions impact your portfolio!
๐ Track rate expectations
๐ Bitcoin's Failed $90K Breakout
Bitcoin staged a brief rally ahead of the FOMC announcement, climbing to approximately $90,071 as traders positioned for potential dovish surprises. The move represented a 2.19% gain that rekindled hopes of reclaiming the psychologically important $90,000 level. Ethereum joined the rally, rising 3.85% to touch $3,026.
The optimism proved short-lived. Following the Fed's decision and Powell's subsequent press conference, Bitcoin reversed sharply. The cryptocurrency dropped to a low of $87,677 before stabilizing around $87,800-$88,000. This rejection at the $90,000 level marks the second failed breakout attempt in January.
The price action creates a concerning pattern for bulls. Each rally attempt meets selling pressure at or near $90,000, suggesting significant resistance at this level. Overhead supply from traders who bought higher and want to exit at break-even creates a wall that bulls must overcome.
January 2026 is shaping up as one of the weakest starts to a year for Bitcoin in recent memory. With a return of only approximately 1.5%, the cryptocurrency has underperformed most major asset classes. Gold's surge to $5,100 has highlighted the contrast between traditional and digital safe havens.
๐ Bitcoin Price Action Around FOMC
| Timeframe | BTC Price | Movement |
|---|---|---|
| Pre-FOMC Rally | $90,071 | +2.19% |
| Post-Decision Low | $87,677 | -2.66% |
| Current Level | ~$88,000 | -1.09% (24h) |
| Weekly Change | — | ~-4% |
| January 2026 ROI | — | +1.5% |
Ethereum's performance has been even more disappointing. After briefly reclaiming $3,000, ETH has fallen back below that level and now trades around $2,900-$3,000. The ETH/BTC ratio continues to weaken, indicating relative underperformance versus Bitcoin during this risk-off period.
Altcoins across the market have suffered as capital rotates toward safety. The total cryptocurrency market capitalization declined by approximately $290 billion in the aftermath of the Fed decision, according to Moneycontrol. This broad-based selling indicates systemic risk reduction rather than asset-specific concerns.
Positioning data reveals the market's cautious stance. Long positions have slipped to around 48% of total open interest, suggesting traders are not aggressively betting on upside. This neutral to slightly bearish positioning could either limit further downside or indicate lack of buying conviction.
๐ค Powell's "Solid Economy" Message
Federal Reserve Chair Jerome Powell's post-meeting press conference struck a notably confident tone about the U.S. economy. His characterization that the economy stands on "firm footing" reinforced the committee's decision to hold rates steady. The message effectively pushed back against expectations for imminent rate cuts.
Powell emphasized that the Fed is in no rush to adjust rates further. After cutting three times in late 2025, the committee wants time to assess the impact of those moves on economic conditions. This patient approach suggests rates could remain at current levels for an extended period if economic data cooperates.
The Chair addressed inflation concerns directly, noting that while progress has been made, the Fed's 2% target remains elusive. Services inflation in particular continues to run hot, driven by persistent wage growth in tight labor markets. Until inflation convincingly trends toward target, the Fed has limited room to ease policy.
Powell acknowledged risks from multiple directions. Government shutdown concerns, tariff policies, and geopolitical tensions all create uncertainty that complicates the Fed's task. These factors can affect both inflation and growth in unpredictable ways, justifying the data-dependent approach.
๐ Key Powell Press Conference Takeaways
| Topic | Powell's Message | Market Impact |
|---|---|---|
| Economy | "On firm footing" | Hawkish |
| Rate Path | "No rush to adjust" | Hawkish |
| Inflation | Above 2% target | Hawkish |
| Forward Guidance | Data-dependent | Neutral |
For cryptocurrency markets, Powell's hawkish tone carried significant implications. Lower interest rates typically benefit risk assets by reducing the opportunity cost of holding non-yielding investments like Bitcoin. Delayed rate cuts mean this tailwind will take longer to materialize.
The divergence between the Fed's stance and market hopes created the price reaction seen in Bitcoin. Traders who had built long positions expecting dovish language were forced to unwind those bets. The resulting selling pressure pushed prices back below $90,000.
Research from cryptorank.io suggests that FOMC meetings do not set Bitcoin's direction but instead trigger necessary market repositioning. This pattern held true again, with the Fed decision catalyzing a move that reflected already-present market tensions rather than creating entirely new dynamics.
⛏️ Historic 40% Hashrate Crash
Beyond macro headwinds, Bitcoin faced an infrastructure shock this week. The network hashrate — the total computing power securing the blockchain — plummeted approximately 40% due to a severe winter storm affecting U.S. mining operations. This represents the largest single decline in Bitcoin's history.
According to data from CoinWarz and KuCoin, Bitcoin's hashrate dropped from a peak of approximately 1.16 zettahashes per second (ZH/s) to around 663-690 exahashes per second (EH/s). This brought network power down to levels not seen since mid-2025, erasing months of hashrate growth in a matter of days.
The winter storm forced miners across Texas and other key U.S. mining regions to curtail operations. Grid operators requested miners reduce electricity consumption to ensure power availability for residential heating during the extreme cold. Major mining pools saw significant capacity reductions as facilities went offline.
Abundant Mines, a mining intelligence firm, estimated that approximately 40% of global Bitcoin mining capacity went offline during the peak of the storm impact. The concentration of mining operations in Texas, which hosts a significant portion of U.S. hashrate, made the network particularly vulnerable to regional weather disruptions.
๐ Bitcoin Hashrate Decline Details
| Metric | Value |
|---|---|
| Peak Hashrate | ~1.16 ZH/s |
| Storm Low | ~663-690 EH/s |
| Decline | ~40% |
| Cause | U.S. Winter Storm |
| Historical Significance | Largest single decline ever |
The hashrate decline has several implications for the Bitcoin network. Block times temporarily increased as fewer miners competed to solve cryptographic puzzles. This created backlogs in transaction processing, though the network's difficulty adjustment mechanism will eventually compensate for reduced hashrate.
From a security perspective, the hashrate drop theoretically makes the network more vulnerable to 51% attacks. In practice, the remaining hashrate remains far too high for any realistic attack scenario. The decline is noteworthy as an infrastructure event rather than a security emergency.
Mining economics also face pressure. Bitcoin miners are reportedly losing approximately $8,000 for each BTC mined at current price levels, according to separate analysis. The combination of lower prices and disrupted operations creates challenging conditions for mining profitability.
The good news is that hashrate typically recovers quickly once weather conditions normalize. Miners have strong incentives to resume operations as soon as possible to capture block rewards. Partial recovery has already begun as the storm moves through the affected regions.
⛏️ Monitor Bitcoin Network Health
Track hashrate, difficulty, and mining metrics!
๐ Blockchain.com Charts
๐ Technical Damage Assessment
Bitcoin's failure to hold above $90,000 has inflicted significant technical damage on the chart. The repeated rejections at this level establish it as formidable resistance that bulls must overcome to change the near-term trend. Each failed attempt reinforces the ceiling and attracts more sellers.
CCN analysis describes the technical outlook as "extremely bearish" following the FOMC-driven reversal. The exponential moving averages (EMAs) have flipped bearish, with shorter-term averages crossing below longer-term averages. This "death cross" pattern often precedes extended downtrends.
Support levels have come under increasing pressure. The $86,000-$87,000 zone represents the immediate floor that bulls must defend. A decisive break below this area could trigger cascading liquidations and accelerate the decline toward secondary support at $78,000-$80,000.
Some traders are targeting the $93,500 liquidation zone as a potential catalyst for upside. Large clusters of short positions exist near this level, and a squeeze could propel prices higher. However, reaching this zone requires first overcoming the $90,000 resistance that has proven so difficult.
๐ Bitcoin Technical Levels to Watch
| Level Type | Price | Significance |
|---|---|---|
| Major Resistance | $90,000 | Multiple rejections |
| Liquidation Target | $93,500 | Short squeeze zone |
| Immediate Support | $86,000-$87,000 | Current test zone |
| Secondary Support | $78,000-$80,000 | Pre-election breakout |
| Major Support | $72,000-$75,000 | Worst case scenario |
Volume patterns provide additional concern. Selling volume has exceeded buying volume during recent sessions, indicating distribution rather than accumulation. Healthy bull markets typically show the opposite pattern, with buying volume dominating during advances.
The Relative Strength Index (RSI) on daily timeframes hovers in neutral territory, neither oversold nor overbought. This suggests room for the price to move in either direction without hitting extreme readings. A drop into oversold territory (below 30) could signal capitulation and potential reversal.
Bitcoin's correlation with gold has turned notably negative during this period. While gold surged to all-time highs above $5,100, Bitcoin declined. This inverse relationship during risk-off episodes continues to challenge the "digital gold" narrative that underpins much institutional interest.
๐ฎ What Comes Next for Crypto
The near-term outlook for cryptocurrency depends on several developing factors. Today's SEC-CFTC harmonization event (2 PM ET) and the Senate Agriculture Committee's crypto bill markup (10:30 AM ET) could provide regulatory catalysts. Positive developments on either front might shift sentiment despite the challenging macro backdrop.
The SEC-CFTC event aims to clarify jurisdictional boundaries and establish a framework for U.S. leadership in digital assets. Progress toward regulatory clarity has historically been bullish for crypto markets by reducing uncertainty for institutional investors. Any concrete announcements could trigger relief rallies.
The crypto market structure bill moving through the Senate Agriculture Committee represents the most significant legislative development for the industry. If passed and signed into law, it would provide the clear regulatory framework that many institutions have demanded before increasing crypto exposure.
From a macro perspective, the next FOMC meeting in March will be closely watched. Economic data between now and then will shape expectations for rate policy. Weaker data could revive rate cut hopes, while stronger data would reinforce the Fed's patient stance.
๐ Upcoming Catalysts for Crypto Markets
| Event | Date/Time | Potential Impact |
|---|---|---|
| Senate Crypto Bill Markup | Jan 29, 10:30 AM ET | High (Regulatory clarity) |
| SEC-CFTC Harmonization | Jan 29, 2:00 PM ET | Medium-High |
| Next FOMC Meeting | March 2026 | High (Rate decision) |
| Hashrate Recovery | Days to weeks | Medium (Network health) |
Long-term bulls point to unchanged fundamentals. The halving supply shock continues working through the system. Institutional infrastructure including ETFs with over $120 billion in assets remains in place. The Strategic Bitcoin Reserve signals government recognition of Bitcoin's role. These factors support optimism on longer timeframes.
For traders and investors, the current environment demands patience and disciplined risk management. Avoiding leverage, maintaining appropriate position sizes, and dollar-cost averaging into weakness represent prudent approaches. Trying to time exact bottoms often leads to frustration and losses.
The Fear & Greed Index remaining in "Extreme Fear" territory historically suggests we may be closer to a bottom than a top. Extreme fear readings have often preceded recoveries, though timing remains unpredictable. Patient investors who can stomach volatility may find current prices attractive for long-term accumulation.
๐บ Watch SEC-CFTC Event Live
The harmonization event streams on SEC website at 2 PM ET today!
๐ SEC Event Page
❓ FAQ
Q1. What did the Fed decide at the January 2026 meeting?
A1. The Federal Reserve held interest rates steady at 3.5%-3.75% in a split decision. Chair Powell characterized the economy as being on "firm footing" and indicated no rush to adjust rates further. The decision matched market expectations but disappointed those hoping for dovish signals.
Q2. Why did Bitcoin fail to break $90,000?
A2. Bitcoin rallied to approximately $90,071 ahead of the FOMC decision but reversed after Powell's press conference struck a hawkish tone. The rejection established $90,000 as significant resistance. Overhead supply from traders wanting to exit at break-even creates a wall bulls must overcome.
Q3. What caused the 40% hashrate drop?
A3. A severe winter storm affecting Texas and other U.S. mining regions forced miners to curtail operations. Grid operators requested power reduction to ensure residential heating availability. This caused the largest single hashrate decline in Bitcoin's history, from 1.16 ZH/s to approximately 663-690 EH/s.
Q4. Is the hashrate drop a security concern?
A4. While the decline theoretically makes the network more vulnerable, the remaining hashrate is still far too high for any realistic 51% attack scenario. The drop is noteworthy as an infrastructure event rather than a security emergency. Hashrate typically recovers quickly once weather normalizes.
Q5. What key support levels should I watch?
A5. Immediate support sits at $86,000-$87,000, currently being tested. If this fails, secondary support appears at $78,000-$80,000 (pre-election breakout level). The worst-case scenario targets $72,000-$75,000. Resistance remains at $90,000 with a liquidation target at $93,500.
Q6. What regulatory events are happening today?
A6. Two major events: The Senate Agriculture Committee's crypto bill markup at 10:30 AM ET, and the SEC-CFTC harmonization event at 2:00 PM ET. Both could provide positive catalysts if they signal progress toward regulatory clarity for the cryptocurrency industry.
Q7. When is the next FOMC meeting?
A7. The next FOMC meeting is scheduled for March 2026. Economic data between now and then will shape expectations. Markets currently price approximately two rate cuts for the full year, though this could change based on inflation and employment reports.
Q8. Should I buy Bitcoin at current prices?
A8. Investment decisions depend on your personal situation, risk tolerance, and time horizon. The Fear & Greed Index in "Extreme Fear" territory has historically preceded recoveries, though timing is unpredictable. Dollar-cost averaging and appropriate position sizing help manage risk regardless of direction.
⚠️ IMPORTANT DISCLAIMER
This article is provided for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Cryptocurrency investments are highly volatile and speculative. Past performance does not guarantee future results. Federal Reserve decisions and their market impacts involve significant uncertainty. Always conduct your own research and consult with qualified financial advisors before making investment decisions. The author and LegalMoneyTalk are not responsible for any financial losses incurred based on information in this article.
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Tags: Fed, FOMC, interest rates, Bitcoin, BTC price, Powell, rate decision, crypto market, 2026 forecast, monetary policy, risk assets, hashrate drop, winter storm, ETF outflows
