Markets react to regulatory optimism, but analysts warn momentum remains fragile below key technical levels.
Bitcoin (BTC) briefly surged to $90,000 on Wednesday before pulling back to around $88,000, as investors reacted to renewed optimism that U.S. crypto regulation could gain momentum in Congress. The rally followed comments from President Donald Trump at the World Economic Forum in Davos, where he said he was working “to ensure America remains the crypto capital of the world” and expressed hope to sign crypto market structure legislation “very soon.”
While the statement provided a short-term boost, the move ultimately faded, reflecting how sensitive crypto markets remain to both headlines and shifting expectations around policy. The bill Trump referenced has faced turbulence in recent days after Coinbase withdrew its support ahead of a key markup session, citing major issues within the draft language.
Coinbase CEO Brian Armstrong pointed to concerns that certain amendments could undermine stablecoin incentives by “killing rewards” and give traditional banks new leverage to restrict competition. The withdrawal raised doubts about whether lawmakers can deliver legislation that balances consumer protections, innovation, and industry growth.
Prediction market odds have reflected that uncertainty. Polymarket showed a roughly 40% chance that Congress passes crypto market structure regulation in 2026, down sharply from about 80% earlier this month. That decline suggests traders are becoming more cautious, even as political leaders attempt to restore confidence.
From a technical perspective, bitcoin’s price action is also drawing scrutiny. The token is down roughly 8% from last week’s near $98,000 level, and Compass Point analyst Ed Engel warned that sentiment could remain shaky until BTC reclaims the short-term holder average cost basis, currently near $98,000. Fundstrat’s Sean Farrell echoed concerns, noting that Strategy’s recent $2.13 billion bitcoin purchase failed to generate lasting upward momentum—often a sign of weakening demand.
Still, not all analysts are bearish. 10X Research described bitcoin’s pullback as constructive and potentially a buying opportunity, though it cautioned that a sustained break below $87,000 would be a negative turning point.
For now, bitcoin remains caught between regulatory hope and technical hesitation, with the next move likely determined by both Washington’s progress and the market’s ability to regain confidence above key price levels.
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