Bitcoin slides below $88K amid U.S. shutdown concerns and ahead of the Fed’s initial policy decision

Bitcoin and major cryptocurrencies weakened on Sunday as traders pared risk ahead of the Federal Reserve’s upcoming rate decision and a busy week of earnings from U.S. tech giants.

Bitcoin slipped below $88,000 during thin weekend trading, extending a pullback that has pressured crypto markets over the past week. The largest cryptocurrency was trading near $87,800 in U.S. afternoon hours, down about 2% over the past 24 hours, according to CoinDesk data.

Ether fell toward $2,880, while solana, XRP and cardano each declined between 3% and 5% on the day. On a seven-day basis, most major tokens remain sharply lower, reflecting fragile sentiment and cautious positioning across the market.

The latest dip triggered $224 million in liquidations of bullish positions over the past 24 hours. Bitcoin-linked futures accounted for roughly $68 million of that total, while ether-based contracts saw about $45 million in liquidations, CoinGlass data showed.

Weekend price action is typically driven less by new information and more by positioning adjustments, particularly following volatile sessions earlier in the week.

Currency volatility and macro nerves

Traders are heading into the new week alert to renewed volatility in the Japanese yen. Speculation about possible intervention intensified after Prime Minister Sanae Takaichi warned against “abnormal” market moves, comments that followed a sharp reversal in the currency late Friday.

The yen’s sudden rally raised caution across Asian trading desks, even as officials stopped short of signaling immediate action, according to Bloomberg.

Shutdown risk weighs on sentiment

U.S. political uncertainty added another layer of risk. Senate Democratic leader Chuck Schumer said his party would block a major spending bill unless funding for the Department of Homeland Security is removed, increasing the likelihood of a partial government shutdown.

While budget standoffs are familiar, they can tighten near-term liquidity and weigh on risk assets, particularly during periods of elevated positioning. Historically, bitcoin has often come under pressure ahead of potential shutdowns, with rallies tending to follow once uncertainty eases.

Polymarket traders are currently assigning a 76% probability to a U.S. government shutdown by the end of the month.

Earnings and the Fed in focus

Attention now turns to the week ahead, which features earnings from several megacap technology firms, including Microsoft, Meta Platforms, Tesla and Apple — key members of the so-called “Magnificent Seven.”

Markets will be watching for insight into how artificial intelligence investments are translating into growth, with management commentary likely to shape broader risk sentiment. As bitcoin increasingly trades in line with risk assets, it may react alongside equities to these signals.

The Federal Reserve’s first rate decision of the year will also be closely scrutinized. While policymakers are widely expected to keep rates unchanged, investors will focus on Chair Jerome Powell’s post-meeting remarks for clues on the path of future policy, which could move bitcoin, the dollar and broader markets.