Bitcoin slipped below the $88,000 level on Sunday as crypto markets weakened in thin weekend trading, extending a pullback that has weighed on the crypto market over the past week.

BTC traded around $87,800 in U.S. afternoon hours, down roughly 2% over 24 hours, according to CoinDesk data. Ether fell toward $2,880, while solana, XRP and cardano each posted losses of between 3% and 5% on the day. Most major tokens have remained sharply down over the past seven days, reflecting the fragile sentiment across the market.

The move caused $224 million in liquidations on bullish bets in the last 24 hours, led by $68 million on bitcoin-tracked futures and $45 million on ether-based futures, according to CoinGlass data.

Weekend moves are often driven less by fresh information and more by positioning adjustments, particularly after periods of heightened volatility earlier in the week.

Traders are entering the new week on heightened alert for possible intervention in the Japanese yen after Prime Minister Sanae Takaichi warned against “abnormal” market moves, comments that followed a sudden reversal in the yen late Friday.

The currency’s sharp rally raised caution across Asian trading desks, even as officials stopped short of confirming any action, per Bloomberg.

The shutdown trade

Elsewhere, political risk in the U.S. added to an already unsettled backdrop.

Senate Democratic leader Chuck Schumer said his party would block a major spending package unless funding for the Department of Homeland Security is removed, increasing the risk of a partial government shutdown.

While such standoffs are familiar, they can tighten near-term liquidity conditions and weigh on sentiment across risk assets, particularly during periods of elevated positioning.

Previously, heading into a potential government shutdown, bitcoin has historically seen selling pressure, followed by a rally.

Currently, Polymarket traders are putting a 76% chance on a U.S. government shutdown by the end of this month.

Read more: Previous U.S. Government Shutdown Aligned With Bitcoin's Bear Market Bottom

Big Tech earnings

Attention now turns to the week ahead, with investors also looking to a heavy earnings week that includes results from several megacap technology firms, including Microsoft, Meta Platforms, Tesla, and Apple, among the "Magnificent 7" tech giants.

Traders will be watching for any clues on how these companies' earnings trends are shaping artificial intelligence (AI)-related results. And market will likely move based on their comments for the AI industry outlook. Bitcoin, which is now trading like a risk asset, may also move with these results and comments.

Meanwhile, the Federal Reserve's first rate decision of this year will also be widely watched by the traders. While the Fed is expected to hold rates steady at its upcoming meeting, the market will be closely watching what Chairman Jerome Powell says during his post-meeting press conference, which could move bitcoin and other asset classes.

Read more: Here's what Fed's highly anticipated rate decision this week means for bitcoin and the dollar

UPDATE (Jan. 25, 6:13 PM UTC): Updates throughout with data and additional context.