MarketsBitcoinEthereum
|4 min ReadU.S.-China talks end, Fed cuts again, Bitcoin breaks $110k: where did the confidence go?
Maya Chen
Senior Analyst
Published
Jan 16, 2026
Markets sink after diplomacy and rate cuts
The long-awaited U.S.-China meeting wrapped up smoothly on Oct. 30, but the crypto market didn’t celebrate. Bitcoin briefly fell below 111,424, down 1.68 percent in 24 hours. Ethereum traded near 195.9 and $1,117 after early losses.
Solana remained in a strong range after a major catalyst. Grayscale’s Solana Trust ETF listed on the New York Stock Exchange on Oct. 29, the second U.S. spot Solana ETF after Bitwise. According to SoSoValue, its net asset value reached 117 million and a market cap ratio of 0.4 percent.
In derivatives, total liquidations hit 613 million in longs and 11 million BTCUSD position on Bybit. The market has been what traders call a “monkey market”: volatile, choppy, and grinding.
BTC spot ETFs ended a four-day inflow streak with $470 million in outflows, while ETH ETFs also saw mild outflows. The broader trend shows investors taking profits after the rally.
Fed cuts rates, China and U.S. shake hands
Two big macro events landed at once. The Federal Reserve cut rates by 25 basis points, lowering its benchmark to 3.75–4.00 percent. It was the second straight cut. The Fed also announced it will end balance sheet reduction on Dec. 1 and reinvest all principal payments from agency debt and MBS into short-term Treasuries as an effort to keep liquidity stable.
At the same time, the Trump–Xi meeting in Busan went well. Chinese officials said China’s rise and Trump’s “Make America Great Again” vision could run in parallel, calling for partnership and mutual prosperity. The tone was cooperative, signaling both sides want stability.
But the market’s focus quickly turned to December. Will the Fed cut again. Chair Jerome Powell said a government shutdown has temporarily weighed on activity and that “December is not locked in.” He’s walking a fine line, offering no promises, just caution.
Washington’s shutdown has dragged on nearly a month. Lawmakers are now considering a temporary funding bill to ease the damage, possibly early next week. Inflation Insights analyst Omair Sharif warned that if October and November data are missing, the Fed may “pause” due to a data vacuum. Nomura had forecast another 25bp cut in December, but Fed funds futures now put that chance around 72 percent, down from 91 percent.
On-chain whales vote with their wallets
While the Fed moved, whales on Hyperliquid were already repositioning. Data from HyperInsight shows “Abraxas Capital” added short positions across BTC, SOL, and ETH, raising total exposure from 738 million. Another trader, nicknamed “Perfect Counterparty,” doubled down on ETH shorts with a 60 percent unrealized gain and 112,200 average entry. Even long-time bears like “4x Short BTC” saw $136 million in shorts turn profitable.
Bulls aren’t gone. One whale known as “The 100 percent Winner” opened a 111,000 and an additional ETH long at 277 million. Another whale loaded up on meme tokens in the Hyperliquid ecosystem, holding nearly $60 million.
Overall, whales remain slightly tilted to the short side.
Experts split as sentiment thins
Bitcoin believer Michael Saylor told CNBC he still sees BTC reaching 1 million in the long run. Matrixport noted Bitcoin dominance has climbed back to 59.5 percent, signaling capital rotation back to safer, liquid majors as the mini altcoin season cools.
10x Research said Bitcoin’s flat trading since May is not weakness but “a massive redistribution phase.” Old holders are selling, new institutions are buying. The 112,000 zone is key. Holding it keeps the uptrend alive; losing it could trigger a drop toward $85,000.
Allen Ding of New Fire Technology called the sell-off a “pricing adjustment after predictable news.” The 25bp cut was fully priced in, and Powell’s uncertainty talk lifted real yields and the dollar, pressuring risk assets. He expects a “volatile digestion and structural divergence” phase ahead, with attention on the Dec. 1 balance-sheet pivot, stablecoin growth, RWA momentum, and the intersection of AI and crypto narratives.
Four milestones will set the tone into 2026: the Dec. 1 end of QT. The Dec. 10 FOMC decision. ETF inflow patterns. And new narratives from ETF approvals to AI plus Crypto plays. Together, they’ll decide where risk appetite and confidence go next.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.