Bitcoin News Today: Fed Navigates Economic Fog as Crypto Swings, Geopolitics Shift

The U.S. economy faces mounting macroeconomic pressures as the government shutdown, now the longest in history, clouds data visibility and complicates Federal Reserve decision-making. The IMF noted signs of strain in the fourth quarter, with growth likely to decelerate amid disrupted data collection. Federal Reserve Chair Jerome Powell acknowledged the uncertainty, stating, "What do you do if you're driving in the fog? You slow down," highlighting the central bank's cautious stance according to reports. The shutdown's economic toll is estimated to have dented Q4 GDP by 1.5 percentage points, though a partial rebound is projected for early 2026.

Meanwhile, the crypto market has experienced a sharp correction, with Bitcoin falling below $97,000-a 22% drop from its November peak-amid waning confidence in a December rate cut according to analysts. Analysts attribute the decline to a "more hawkish Fed stance and a vacuum in macro data," as traders rebalance risk exposure according to market analysis. However, recent ETF inflows have sparked a tentative recovery, with Bitcoin trading above $104,000 as of Wednesday. Institutional demand is resurging, with U.S.-listed Bitcoin ETFs seeing over $523 million in inflows on Tuesday. Ethereum, however, remains under pressure, with ETF outflows persisting despite a modest rebound in altcoin prices as reported.

Global market dynamics are further shifting as Saudi Arabia's Public Investment Fund (PIF) trims its U.S. equity holdings, exiting stakes in companies like Pinterest, Linde, and Air Products. The $1 trillion fund's U.S. portfolio has shrunk to $19.4 billion, its lowest level in nearly a year, as it pivots toward domestic investments under Vision 2030. Meanwhile, Ukraine secured U.S. liquefied natural gas supplies via Greece to bolster winter energy security, a move that replaces production lost to Russian strikes according to reports. The agreement underscores Europe's growing reliance on U.S. energy as it phases out Russian imports as reported.

Market sentiment remains risk-averse, with the crypto Fear & Greed Index hitting an extreme fear level of 10-the lowest since February-amid profit-taking and macroeconomic uncertainty according to market data. Harvard University's endowment recently deepened its crypto exposure, committing $443 million to BlackRock's Bitcoin ETF (IBIT), signaling institutional confidence in the asset class.

The interplay of these factors-government shutdowns, Fed hesitation, crypto volatility, and geopolitical energy shifts-highlights a market grappling with uncertainty. As the U.S. government prepares for another potential shutdown in January, investors brace for further turbulence, with sectors like aviation and energy facing heightened risks as analysts project.