Bitcoin Faces Pressure Amid Tightening Rate Expectations and ETF Outflows

According to BlockBeats, Bitcoin experienced a significant decline this week, briefly falling below the crucial $90,000 mark. This drop was attributed to tightening expectations of interest rate hikes and continuous outflows from ETFs, which dampened market sentiment. The thin liquidity further amplified the downturn, highlighting Bitcoin's increasing sensitivity to macroeconomic changes. The correction occurred against the backdrop of a rapid repricing of Federal Reserve expectations, shifting from an almost certain December rate cut to a more balanced probability. This shift exerted pressure on interest rate-sensitive assets like Bitcoin, while the stock market remained relatively stable due to robust corporate earnings, particularly from large tech companies reporting strong profits and record AI-driven capital expenditures. With the U.S. government reopening, official data releases provided necessary insights into the economic fundamentals. This week, the market focused on labor market data and the Conference Board's Leading Economic Index (LEI), which now includes the latest job vacancy data. These insights will help determine whether labor tightness or inflation will dominate the Federal Reserve's policy response in 2026. Beneath the surface, the U.S. economy continues to exhibit a K-shaped divergence: high-income households maintain resilient spending, while lower-income groups face increasing pressure. Federal Reserve Chair Jerome Powell reiterated a cautious stance, indicating that a December rate cut is "not a given." Overall, current economic conditions are closer to a late-cycle phase rather than a recession. Despite ongoing risks from fiscal constraints and labor market disparities, the robust household balance sheets and resilient corporate capital expenditures provide a buffer against downturns. This week's data will determine whether Bitcoin's pullback is a temporary position adjustment or the beginning of a broader decline in risk appetite.