Bitcoin News Today: Bitcoin Traders Price in Sub-$100K Outlook as Fed Spills Cash to Boost Equities

The Federal Reserve's decision to maintain interest rates at 3.75% after a widely anticipated rate cut has sparked mixed reactions across global markets. While equity indices like the S&P 500 and Nasdaq edged upward, cryptocurrencies like Bitcoin showed signs of uncertainty, with options markets indicating a high probability of staying below $100,000 in the near term. The Fed's announcement also included a surprise move to purchase short-term Treasury bills, a shift in policy aimed at managing liquidity in the broader economy.

Investors are closely watching how this injection of cash will affect capital flows and consumer borrowing. The Fed's balance sheet, which had been shrinking for years, is now set to grow as it begins re-injection of liquidity. This policy shift is expected to provide a tailwind for equities, particularly large-cap growth stocks, as companies anticipate lower borrowing costs and higher consumer spending. However, Bitcoin appears to lag behind with traders showing limited conviction in a sustained rally above $100,000.

Derivatives markets have priced in a 70% probability that Bitcoin will remain under $100,000 by January 30, a reflection of ongoing macroeconomic uncertainty and risk aversion. Options traders are paying a $3,440 premium to secure the right to purchase Bitcoin at $100,000 in that timeframe, a sharp drop from $12,700 just a month ago. This decline suggests waning enthusiasm for a Bitcoin breakout and highlights the cautious stance of institutional and whale investors.

How Markets Reacted

Equity markets responded positively to the Fed's decision, with the S&P 500 gaining 0.3% last week and the Nasdaq rising 0.9%. These gains reflect investor optimism about the Fed's willingness to ease monetary policy in 2026. LPL Financial has projected that the S&P 500 could reach 7,300–7,400 by the end of 2026, driven by AI-related investments and continued Fed rate cuts. The Magnificent 7 stocks, including Alphabet, Amazon, and Microsoft, are expected to lead earnings growth, though analysts warn that valuations remain stretched.

Gold and silver, by contrast, have outperformed Bitcoin, rising 60% and 86%, respectively, year-to-date. These precious metals are seen as safe havens amid fears of a potential Fed "policy error," where rate cuts might be implemented while inflation remains stubbornly elevated. The Fed's decision to pause rate hikes and begin buying Treasury bills has fueled these gains, as investors hedge against macroeconomic volatility.

Bitcoin's muted response to the Fed's policy shift has raised questions about its role in a diversified portfolio. While the cryptocurrency climbed to $94,000 after the rate decision, it remains under $100,000 and has been trading in a tight range for weeks. On-chain data from CryptoQuant highlights low selling pressure but warns that a break above $102,000 is needed to confirm a long-term bullish trend.

What Analysts Are Watching

Analysts are closely monitoring how the Fed's liquidity injection will affect Bitcoin's price trajectory. While the Fed's actions could boost risk-on sentiment, Bitcoin's underperformance relative to gold and equities suggests that it may not be the primary beneficiary of an easing monetary policy. The $100,000 level, a key psychological barrier, remains a focal point for traders and investors alike. Options data and whale positioning indicate that a sustained move above this level is unlikely in the short term, despite favorable macroeconomic conditions.

The broader economic outlook is also shaping expectations for 2026. The Fed's new economic projections, set to be released in the coming days, will provide a clearer picture of how policymakers see inflation, growth, and employment evolving next year. These projections will set the stage for the next Fed chair, with President Trump expected to name a successor in early 2026. The leadership transition could bring a shift in tone and policy, particularly given Trump's repeated calls for lower interest rates and regulatory easing.

Meanwhile, Bitcoin options traders are hedging their bets. The $100,000 call option, while still trading at a premium, is a form of insurance against unexpected volatility. If Bitcoin fails to break above this level, the option will expire worthless, but if it surges, the upside is theoretically unlimited. This dynamic reflects the broader uncertainty in markets as the Fed navigates a complex economic landscape.

Risks to the Outlook

Despite the Fed's rate cut and liquidity injection, several risks remain on the horizon. Inflation, though cooling, is still above the Fed's 2% target, and core PCE data has shown signs of stickiness, particularly in the services and housing sectors. These factors could limit the effectiveness of rate cuts and delay a broader economic recovery.

Bitcoin's volatility adds another layer of uncertainty. The cryptocurrency's price is highly sensitive to macroeconomic shocks, as seen in recent weeks when it struggled to break out of a $94,000 to $82,000 trading range. Institutional investors, including SpaceX, which holds roughly $369 million in Bitcoin, are also watching closely, with their decisions likely to influence broader market sentiment.

Looking ahead, investors will be paying close attention to the Fed's January meeting, where a 24% probability of another rate cut is already priced in. If the Fed signals a more aggressive easing cycle, equities could see renewed momentum, but Bitcoin's path remains unclear. For now, the market is in a holding pattern, with both bulls and bears waiting for clearer signals from central banks and economic data.