Bitcoin's price recently experienced a sharp decline, sliding to $84,544 after a brief rally that saw it test near $90,000. This sell-off marks its second consecutive month of downward movement, with Bitcoin losing 2% in the past 24 hours and remaining 5% below its seven-day high of $89,220. The cryptocurrency now hovers near its weekly low of $84,596, with trading volume reaching $56 billion and its market capitalization standing at $1.69 trillion. The circulating supply is approximately 19.96 million BTC out of a total of 21 million.

The initial brief rally, which pushed Bitcoin to challenge $89,000 from intraday lows near $86,000, was spurred by the release of new U.S. Consumer Price Index (CPI) data. Inflation rose by a lower-than-expected 2.7% year-over-year in November, and Core CPI, excluding food and energy, fell to 2.6%, its lowest since early 2021. Traders interpreted this cooler inflation report as a potential precursor to looser Federal Reserve policy in 2026, with CME FedWatch data suggesting slightly higher odds of a rate cut by March, although January moves remain improbable.

However, this rally was short-lived, as Bitcoin failed to breach the $90,000 mark and quickly retraced to $84,400. This pattern of sharp spikes followed by swift pullbacks is becoming a familiar occurrence. Several factors are contributing to this downward pressure. A significant challenge comes from U.S.-listed spot Bitcoin ETFs, which, after being a major source of demand, are now experiencing net redemptions. These outflows are diminishing the institutional support that previously helped stabilize the price, making it more difficult to sustain breakouts above $89,000.

Other economic indicators are also adding to market uncertainty. Recent labor market data indicates that U.S. unemployment has risen to 4.6%, its highest level since 2021, while job growth remains uneven. These mixed signals complicate the Federal Reserve's policy decisions, suggesting a cautious approach despite the easing inflation. Political factors further add to the market's complexity, with President Donald Trump publicly advocating for lower interest rates and suggesting the nomination of a Fed chair favoring aggressive easing. While markets have largely dismissed these comments as noise, they introduce another variable into the broader macroeconomic landscape.

From a technical perspective, the Bitcoin price is currently in a phase of consolidation rather than trending. A strong resistance level has formed just below $90,000, indicating robust supply from investors who acquired Bitcoin during prior rallies. Analysts at Bitwise recently proposed that Bitcoin could break its historical four-year cycle, potentially reaching new all-time highs in 2026 with decreased volatility and reduced correlation to equities. Despite this long-term optimism, the Bitcoin Fear and Greed Index is at 17/100, signaling