Bitcoin Has Rebounded, but... A Fed Leadership Change and Shutdown Threat Make This Week a Crossroads
Bitcoin Has Rebounded, but... A Fed Leadership Change and Shutdown Threat Make This Week a Crossroads
As the virtual asset market has passed through an extreme oversold zone and achieved a sudden technical rebound, this week’s scheduled change in leadership at the Federal Reserve and the possibility of a government shutdown are expected to become the biggest turning points determining the market’s long-term direction.
According to cryptocurrency-focused media outlet CoinGape on February 8 (local time), U.S. President Donald Trump is set to officially nominate former Federal Reserve Governor Kevin Warsh as the successor to Federal Reserve Chair Jerome Powell. If Warsh is appointed to lead the Fed, sweeping changes across U.S. monetary policy, including interest-rate decisions and inflation target setting, would be inevitable. However, as the release of key economic indicators such as the November employment report and inflation figures has been delayed due to the impact of a government shutdown, investors are experiencing significant confusion in gauging the Fed’s future course.
The Federal Reserve’s moves to supply liquidity to the market are also accelerating. Last Tuesday, the Fed abruptly injected $8.3 billion into the market to promote financial stability. This cash infusion is interpreted as an emergency measure aimed at restoring investor confidence weakened by the sharp sell-off that occurred late last week and at building a defensive buffer against an unstable financial environment. Nevertheless, according to Polymarket data, the probability that the federal government will remain partially shut down through next week stands at 66%, indicating that policy uncertainty remains elevated.
Government fiscal reports and the Federal Reserve’s asset data scheduled for release in the middle to latter part of this week are also key factors that will determine the market’s trajectory. The federal budget tally to be released on Wednesday is expected to serve as a health check, showing the government’s revenue and expenditure flows amid current economic challenges. This will be followed on Thursday by the release of the Fed’s balance sheet data, offering an opportunity to confirm the specific strategic choices the central bank will make between curbing inflation and stimulating economic growth.
The virtual asset market has ignited a spark of recovery despite external uncertainties. Bitcoin (BTC) is leading the upside by reclaiming the $71,000 level. Other altcoins have also succeeded in rebounding in tandem. The extreme fear sentiment that once dominated the market, as the Fear and Greed Index hit a weekly low, is gradually shifting toward a more optimistic mood alongside the price recovery.
The total market capitalization of virtual assets rebounded from $2.17 trillion to $2.38 trillion, demonstrating the possibility of a technical recovery. This week is expected to demand a high level of risk management from investors, as the absence of major macroeconomic data, political appointments, and fiscal soundness assessments interact in complex ways. The market plans to continue a cautious approach, focusing on how the unexpected variable of a government shutdown could undermine the predictability of economic policy.
*Disclaimer: This article is for investment reference only, and no responsibility is taken for any investment losses incurred based on it. The content should be interpreted solely for informational purposes.*
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