Core Insights - Bitcoin has dropped below the $90,000 mark, continuing a decline from its recent peak near $120,000 due to uncertain macroeconomic signals and uneven liquidity conditions [1][10] Market Sensitivity - The recent price movements of Bitcoin highlight the market's sensitivity to monetary policy expectations rather than just economic data [3] - The US inflation rate has decreased to 2.7%, indicating a slow and uneven disinflation process, which keeps the Federal Reserve cautious and limits the potential for aggressive easing [4] Institutional Capital Dynamics - Elevated interest rates are causing institutional investors to be cautious regarding Bitcoin, as the cost of capital impacts speculative assets [5] - Without clear signals of a sustained easing cycle from the Fed, institutional capital is likely to remain selective or sidelined [6] - The strength of the US dollar and rising Treasury yields are adding further pressure on Bitcoin, with the dollar index increasing and the 10-year US Treasury yield nearing a three-month high of 4.17% [6] Asset Appeal and Market Dynamics - Higher real yields reduce the attractiveness of non-yielding assets like Bitcoin, especially for institutions with strict allocation frameworks [7] - The emergence of spot Bitcoin exchange-traded funds (ETFs) has altered market dynamics, broadening access and increasing institutional participation while tying Bitcoin more closely to traditional capital flows [7] Long-term Institutional Involvement - The increasing involvement of major financial institutions, including asset managers and banks, is reinforcing Bitcoin's status as an institutionalized asset, marking a shift from previous market cycles [8] Holder Confidence Indicators - On-chain indicators reveal that long-term holders remain active, as evidenced by relatively low exchange reserves, suggesting confidence among holders [9] - Despite low exchange reserves indicating holder conviction, analysts anticipate consolidation rather than a near-term breakout for Bitcoin [10]