Bitcoin Update: Federal Reserve's Balancing Act and Death Cross Indicate Extended Bitcoin Downturn

Bitcoin’s recent drop below $91,000 has heightened worries about a larger market downturn, fueled by a mix of ETF withdrawals, changing expectations for Federal Reserve policy, and negative technical trends. The cryptocurrency’s losses have been deepened by

from BlackRock’s (IBIT) in just one day on Tuesday, contributing to nearly $3 billion pulled from U.S. ETFs throughout November. This wave of selling, along with ongoing outflows from and ETFs, .

The Federal Reserve’s tightening measures have become a major talking point. Fed Governor Christopher Waller, who supports a 25-basis-point rate reduction at the December 9–10 meeting,

as reasons for his view. His position differs from more hawkish members, adding to the uncertainty about the Fed’s next steps. Currently, markets , a steep drop from 93.7% just a month earlier. Meanwhile, Abu Dhabi’s Mubadala Investment Co. has tripled its Bitcoin assets in recent months, .

Technical signals are also highlighting a bearish outlook. Bitcoin’s 50-day and 200-day exponential moving averages

, creating a “death cross”—a pattern often seen as a negative indicator. The RSI has dropped into oversold levels, and at $85 billion, showing a shift toward risk aversion. At the same time, increased their short positions by $5.7 million within a single day, further fueling bearish expectations.

The recent selloff has also revealed weaknesses within the crypto sector. Tom Lee from Bitmine Immersion cautioned about financial shortfalls at two leading market makers, while the XRP derivatives market remains sluggish, with

. These factors have pushed both Bitcoin and Ethereum into a technical bear market, with ETH dropping 35% from its yearly peak and BTC down 25%.

With the Fed’s December meeting approaching, investors are divided. While Waller’s dovish approach and Abu Dhabi’s aggressive investments provide some optimism, the broader economic environment—including political influences on the Fed and unresolved macroeconomic risks—suggests caution. For now, the market seems to be bracing for an extended downturn, with major support levels and institutional moves likely to determine the next trend.