MarketsBitcoin
|8 min ReadWhat Bitcoin Still Needs Before It Can Rise Again
Maya Chen
Senior Analyst
Published
Jan 16, 2026
Bitcoin should have enjoyed the party. Nvidia delivered a tremendous earnings blowout, Wall Street cheered, Nasdaq futures jumped, and risk appetite lit up across tech. Instead, Bitcoin slipped. It fell to 91,363 dollars, down about 3 percent, while Nvidia added roughly 22 billion dollars in market cap overnight.
This is the story now. Bitcoin was once marketed as digital gold, a hedge against inflation, a safe harbor in moments of fear. Today it trades like a high-beta tech stock. When Nvidia soars, Bitcoin sulks. When real gold climbs 55 percent in a year, Bitcoin ends up back where it started. The identity crisis is real.
Institutional flows explain part of the shift. Since 2020, Bitcoin’s correlation with equities has turned positive. ETF inflows, listed crypto companies, and the mainstreaming of Bitcoin have pulled it into the same world as tech stocks. The upside is bigger access to capital. The downside is that Bitcoin now gets sold in every risk-off moment.
And right now the world is in a risk-off mood. One week of selling erased 12.5 percent from Bitcoin. Crypto ETFs saw 867 million dollars of net outflows in a single day. Long-term holders started moving coins. Dormant supply dropped from 8 million BTC to 7.32 million BTC this year. Liquidity is tight. Fear is high.
But the picture can change. Bitcoin can rise again. It will just need several powerful conditions to align.
Liquidity Injection After the Government Reopens
The United States government reopened on November 18 after a 43-day shutdown. That shutdown froze spending, withheld paychecks from 1.25 million federal employees, and pushed the Treasury General Account (TGA) to a massive 959 billion dollars.
When the TGA rises, liquidity is drained from markets. When the TGA falls, liquidity returns.
Right now the TGA has not meaningfully declined. Federal workers will receive about 16 billion dollars in back pay, but that alone won’t move markets. The real liquidity release begins in early December, when normal government spending resumes and tax flows stabilize. At that point the TGA begins to fall, injecting cash back into the system.
The precedent: in 2019, after a 35-day shutdown, the Treasury cut the TGA by 211 billion dollars in a single month. Stocks rose 8.5 percent. Bitcoin rose 35 percent in the following 30 days.
This time the TGA is more than double the 2019 size. The potential liquidity impact is enormous.
A Fed Pivot or Even a Hint of One
The second condition is the Federal Reserve.
The latest minutes show deep division inside the Fed. Most officials fear that additional cuts could reignite inflation. White House advisers warn they have “lost control” of inflation. President Trump blasts Jerome Powell as “extremely incompetent.”
CME FedWatch shows only a 36.2 percent chance of a December rate cut. Thirty-year, ten-year, and five-year Treasury yields are rising. The market has almost abandoned hopes of a year-end cut.
Worse, the Bureau of Labor Statistics cannot publish October’s employment report because the data was not collected during the shutdown. The November report, which includes two months of data, will be released December 16. That means the Fed will hold its final 2025 meeting without labor data.
Markets hate uncertainty. Bitcoin hates liquidity stress even more.
But look further out. The probability of a January 2026 cut is almost 50 percent, the highest among all upcoming meetings. If the December 16 jobs report is weak, rate-cut expectations will return fast.
And globally, the tide is already turning. The European Central Bank faces inflation near its 2.1 percent target and could cut rates in December. Historically, ECB cuts and Bitcoin rallies show a correlation of 0.85 because European liquidity spills into global markets.
All Bitcoin needs is a synchronized softening in global monetary policy. The odds are rising.
Economic Stabilization
The U.S. economy is flashing mixed signals.
Trade deficits narrowed sharply in August, boosting GDP expectations to nearly 3.8 percent. But this improvement came at the cost of lower imports, which hurts supply chains over time.
The shutdown caused 16 billion dollars in lost wages and drove consumer confidence to a three-year low. The Congressional Budget Office expects fourth-quarter GDP to take a 1.5-point hit.
Inflation remains painful for daily life. Beef, a staple for Americans, is up more than 50 percent compared to three years ago. Roasted beef is up 18.4 percent. Steaks are up 16.6 percent. Coffee is up 18.9 percent. Natural gas is up 11.7 percent. Auto repair is up 11.5 percent. Electricity is up 5.1 percent.
A K-shaped economy is emerging. Higher-income groups benefit from AI-driven markets. Lower-income families struggle with rising living costs. Twenty-five percent of households live paycheck to paycheck.
Export nations such as Japan, Switzerland, and Mexico are slowing under U.S. tariffs, creating global ripple effects that tighten risk appetite.
But economies stabilize. Consumer spending returns. If the U.S. economy regains footing, Bitcoin—like all risk assets—will regain inflows.
Institutional Inflows Return
Institutions are the “human factor” after macro conditions align.
Right now flows look terrible. Between November 13 and 19, ETFs saw 2 billion dollars of outflows. Total AUM is 122.3 billion dollars, or 6.6 percent of Bitcoin’s market cap—low by historical standards.
Institutions face career risk. They fear being wrong more than they desire earning extra returns. That means managers often mimic the market’s consensus. When Bitcoin drops, they cut exposure. When Bitcoin rises, they chase.
But when flows turn, they turn violently.
Three signals matter:
Signal 1: Three straight days of net inflows
Historically this leads to a 60 to 70 percent Bitcoin rally in the following 60 to 100 days.
Signal 2: A single-day inflow above 500 million dollars
This signals large institutional conviction. In October 2024, 3.24 billion dollars flowed in during a single week, sending Bitcoin to new highs.
Signal 3: AUM rising back above 8 percent of Bitcoin’s market cap
At the 2024 peak, this threshold triggered a powerful momentum phase.
Once institutions flip, the move is fast and dramatic.
When Bitcoin Might Rise Again
Investors always want the timeline. While no one can predict markets, we can map out the key catalysts ahead.
December 10: The FOMC meeting
A cut would spike Bitcoin. Even a dovish tone could lift the market. A hawkish stance likely pressures Bitcoin short term.
December 16: Delayed employment data
Two months of consolidated labor data will shape January rate expectations. Weak numbers dramatically raise early-2026 cut odds.
Late December: Seasonal liquidity
Holiday rebalancing, thin order books, and year-end adjustments often produce outsized moves. If macro conditions lean positive, a Christmas rally is possible.
Q1 2026: The biggest window
If the Fed cuts. If the ECB cuts. If China maintains easing. If the TGA releases liquidity. If institutions return.
These forces together can produce a synchronized global liquidity wave—the strongest fuel Bitcoin can receive.
In 2020, such a wave pushed Bitcoin from 3,800 dollars to 28,000 dollars in nine months. A full repeat is unlikely, but a smaller version is entirely possible.
For now, the market is waiting. But the ingredients for a major reversal are already forming. Bitcoin doesn’t need miracles. It needs liquidity, clarity, and conviction—and those may arrive sooner than most expect.
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.