Bitcoin consolidates below 70K as Fed uncertainty and software weakness cap upside

Bitcoin is trading quietly after holiday-thinned trading at the start of the week and in the absence of direct catalysts. Bitcoin has fallen 50% from its October record high and is entering its fifth consecutive monthly decline, down roughly 50% from its October peak, with little evidence of sustained dip-buying. 

Recent pressure has stemmed from uncertainty surrounding Federal Reserve policy under incoming Chair Kevin Warsh and conflicting U.S. data. Stronger-than-expected non-farm payrolls pointed to labour market resilience, while softer CPI at 2.4% kept hopes alive for further easing. 

This week’s core PCE, Q4 GDP and FOMC minutes will be key. Markets are pricing in around 63 basis points of cuts this year — implying two to three reductions — compared with the Fed’s guidance of just one. This disconnect between market expectations and central bank signalling remains a core volatility risk for BTC. 

Software sector correlation weighs on BTC 

Bitcoin’s weakness has closely tracked the downturn in U.S. tech. The rotation from growth stocks into value is weighing on BTC. The tech-heavy Nasdaq has fallen 4% so far in February, whereas the Dow Jones has traded 1.2% higher. Delving deeper into the BTC – tech stock correlation, this is more specifically tied to the Software sector. The S&P 500 software industry has fallen 18% over the past month amid concerns that AI disruption could erode business models, hurting valuations. 

BTC has traded in near lockstep with software stocks over the past 18 months, reinforcing the view that it is behaving less like a diversifier and more like a high-beta extension of the tech trade. As long as software remains under pressure, BTC may struggle to decouple and recover. 

Institutional flows and sentiment remain fragile 

Institutional positioning continues to act as a headwind. U.S. spot BTC ETFs have recorded four consecutive weeks of net outflows, signalling sustained caution among allocators. Harvard University’s reduction of its BTC ETF exposure in Q4 underscores the defensive shift in positioning. 

Meanwhile, the Crypto Fear & Greed Index remains in “Extreme Fear” at 10, hovering near historic lows. Weak sentiment combined with soft institutional demand suggests rallies are likely to remain corrective rather than structural — at least until liquidity expectations stabilise and tech sentiment improves. 

Bitcoin technical analysis 

After falling to a low of 60k, BTC/USDT recovered to trade in a narrow range between 65.7k and 71.5k. At 68.8k, the price remains within this range. The price remains below the 20 SMA and the RSI below 50, favouring the bears. 

Sellers would need to break below 65.7k to bring 60k back into focus. A break below here brings the 50k psychological level into focus. 

A break above 71.5k, breaks BTC out of range to the upside. Above here, 75k, the round number comes into focus ahead of 80k. A rise above 85k negates the longer-term downtrend.