Bitcoin retreats to $84 mil: understand the probabilities of recovery after inflation data

Understanding the odds that move the cryptocurrency market is essential for investors trying to navigate the current volatility. Bitcoin, which was up 2% in mid-January, is now in retraction, reflecting changes in monetary policy expectations. Inflation data released in the first days of 2026 reinforced the scenario of a soft landing of the US economy, significantly altering the probabilities of actions by the Federal Reserve in the coming months.

Lower-than-expected CPI: the chances of further rate cuts increase

The US Consumer Price Index remained at 2.7% as expected, while the core IPCA presented a result below the consensus of analysts. These weakened numbers have opened space for the market to reassess its probabilities about future interest rate reductions. According to analysis by Matt Mena, crypto strategist at 21Shares, “the CPI report provided the definitive anchor the market needed to dispel the lingering fog of late-2025 data, reinforcing the Fed’s soft landing narrative and increasing the chances of further cuts later this year.”

The biggest question now concerns the true odds. Platforms specializing in market forecasts such as Polymarket indicate only a 3.6% probability that the Fed will cut rates by 25 basis points in the month, while Kalshi remains at 5%. These seemingly low numbers reflect market skepticism about the upcoming timeline, even with economic data favorable to the soft landing narrative.

Market reacts, but faces critical technical resistance

Bitcoin surpassed $93,500 on Tuesday of the said period, reacting positively to the combination of contained inflation data, political instability and renewed interest in cryptocurrencies as a macroeconomic hedge. However, the movement was not sustained. Currently, on Jan. 29, Bitcoin sits at $84,640, representing a significant pullback that has raised questions about the odds of recovery.

The resistance zone between $93,500 and $95,000 remained a critical barrier for almost two months, and its failure to break out suggests that buyers have failed to consolidate the gains. Mena pointed out that “if bitcoin manages to break through the resistance zone between $93,500 and $95,000, the odds of a subsequent run to $100,000 would increase significantly.” However, with the current pullback, these odds have decreased considerably.

Altcoins follow the downward movement

Ethereum, which had reached $3,185, is now at $2,810, reflecting a drop of 6.25%. BNB also showed similar behavior. The CoinDesk 20 index, which measures the broader performance of the crypto market, has shown positive movement in the period analyzed, but the subsequent recovery has been limited. Gold, meanwhile, continued to advance, surpassing the $4,600 mark, suggesting that investors are looking for protection in assets with lower volatility.

Meanwhile, the S&P 500 and Nasdaq indices demonstrated relative resilience, with modest declines of around 0.2% in the initial January session, creating a picture where the odds of cryptocurrencies standing out as an alternative asset class intensify.

How they calculate the probability of Fed decisions: political and economic factors

Political tensions have injected greater uncertainty into the probabilities of the Federal Reserve’s decision. The growing friction between President Donald Trump and Fed Chair Jerome Powell, including a Justice Department subpoena threatening criminal prosecution, has raised significant concerns about the institution’s independence. These policy issues directly modify the probabilities of how the Fed will react to future economic data.

Mena added that “if the upcoming retail and housing sales data confirms that the consumer remains resilient, we expect a clearer analysis of the probabilities of a decisive breakout of resistance between $93,500 and $95,000.” Key events that could inject new volatility into markets include the Supreme Court’s impending decision on federal pricing authority, expected on Wednesday, which could impact both the dollar and risk assets.

Crypto legislation advances: better chances for institutional approval

One positive development lies in the advancement of market structure legislation in the Senate. The latest draft released showed a compromise on stablecoin yields and protection for decentralized finance, increasing the odds of institutional approval in the sector. If passed, this bill could offer a potential boost to crypto assets by offering a “stamp of approval” that would raise the odds of institutional capital inflows.

Cascading liquidations and market recalibration

Bitcoin’s subsequent fall back to the $84,000 ranges sparked more than $650 million in liquidations across the crypto market. While gold and stocks rebounded from the session’s worst levels, cryptocurrencies remained at the day’s lows, raising questions about how far the odds point to a price floor. A funding indicator suggested a temporary bottom could be near, while analysts suggested a reversal might not occur until the Fed adopts significantly looser monetary policy.

To understand Bitcoin’s future probabilities

The current scenario presents a situation where multiple probabilities converge and diverge simultaneously. Inflation data has created room for hope about rate cuts, but the real odds according to Polymarket and Kalshi remain low. Bitcoin’s price movement reflects this complexity, pulling back from resistance levels that would signal upside possibilities up to $100,000.

With $84,640 as the current level, the central question becomes understanding which variables will alter the probabilities of recovery. 21Shares and other analysts continue to monitor retail, housing and policy data as critical factors that will redefine market expectations. The likelihood of successful scenarios for Bitcoin in 2026 will fundamentally depend on how the market calculates the combined impact of monetary policy, crypto legislation, and political stability in the coming months.