Analysis: Bitcoin struggles to break through $90,000, possibly due to the Federal Reserve's balance sheet reduction draining market liquidity

Bitcoin has failed to hold the key price level of $92,000 over the past month and is currently hovering below $90,000. Some traders believe that the recent decline in Bitcoin's price is due to market manipulation, while others attribute the price drop to increasing concerns about the artificial intelligence industry. However, analysts suggest that a significant factor limiting Bitcoin's price increase is the Federal Reserve's reduction of its balance sheet for most of 2025, which has drained liquidity from the financial markets. Despite clear signs that the Federal Reserve is shifting towards a more accommodative monetary policy, traders are uncertain whether the Fed can lower interest rates below 3.5% in 2026. With investors' risk aversion rising, Bitcoin is unlikely to serve as a hedge in the short term.