Bitcoin is under short-term pressure as macroeconomic shifts and changing sentiment continue to impact bullish momentum.

Despite reaching a record high of over $108,000 in December, Bitcoin has seen a reversal driven by a stronger US dollar, increased volatility, and cautious positioning among traders.

That's according to Joe McCann, founder and CEO of cryptocurrency investment firm Ametric, who has taken a more bearish view in the near term while maintaining a bullish stance in the longer term.

McCann noted that a confluence of market signals, including the Fed's hawkish press conference on December 18 and a big move in the Volatility Index (VIX), has shifted the short-term odds in favor of a downward correction.

The US dollar, which is measured by the dollar index (DXY), has been a focal point among top analysts, including Real Vision's chief cryptocurrency analyst. Jimmy Coates.

On the same day that the Fed cut interest rates by 25 basis points, the DXY unexpectedly rose, breaking multi-year resistance levels.

“In theory, this doesn't make any sense,” McCann chirp on Tuesday, in a nod to traditional expectations of a weaker dollar when interest rates are cut.

However, the dollar's strength reflects underlying market dynamics that include constraints on global liquidity and investor demand for safe haven assets.

However, market participants are not completely bearish.

McCann emphasized that it maintains a large cash position, which allows flexibility in capturing value during downward moves.

“There are moments in bull markets where the odds on outcomes favor a move to the downside, even for a few weeks, which can provide opportunities to generate alpha,” he said.

In other words, short-term declines can be an opportunity for smart investors to make extra money by buying during the decline and selling when prices rise again.

However, these situations often lead to investors being caught on the wrong side of the trade and are incredibly difficult to predict.

Looking ahead, analysts note that Bitcoin's path will remain tied to broader macroeconomic conditions, including Federal Reserve policy and the performance of the US dollar.

“Ripples of favorable regulatory narratives continue to support the spot market,” Singaporean cryptocurrency trading firm QCP Capital wrote in a note to investors on Monday. “However, it will not be smooth sailing in January, as structural risks loom large.”

The US Treasury is expected to reach its debt limit mid-month, forcing it to use special steps to continue paying government bills, for example.

“This could lead to market volatility as discussions around the issue intensify,” QCP wrote.