Key takeaways:
- Bitcoin once again failed to surpass the $90,000 mark as investors shifted preference toward gold and bonds.
- Record highs in the S&P 500, coupled with lower interest rates, have diminished Bitcoin’s appeal as a hedge compared with traditional equities.
BTC recovery stalls at $90,000
Bitcoin encountered significant resistance near $90,000 on Monday, sparking nearly $100 million in liquidations across leveraged positions.
Rising demand for traditional hedges, including gold and US government bonds, has left traders questioning whether BTC has the momentum to push back toward the $100,000 mark.
Gold prices remained above $4,300 on Monday, while yields on the 2-year US Treasury dropped to their lowest levels since August 2022. The growing appetite for government-backed assets reflects broader risk aversion, especially as the US fiscal deficit is projected to widen in 2026. Additionally, the Treasury faces the challenge of rolling over approximately $10 trillion in debt over the course of the year.
Jimmy Chang, chief investment officer of the Rockefeller Global Family Office, reportedly told Reuters:
“We’re in this age of financial repression with governments using various tools to artificially keep a lid on bond yields.”
Meanwhile, the drag on US economic growth from import tariffs has been offset by substantial spending on artificial intelligence infrastructure, Yahoo Finance reports.
Investors cautious on Bitcoin amid potential rate cuts
Investor sentiment toward Bitcoin has weakened following the US Department of Labor’s report showing the November unemployment rate at 4.6%—the highest in four years. Typically, such data would raise expectations for more aggressive Federal Reserve stimulus. However, inflation concerns are limiting the Fed’s flexibility.
Despite this, the S&P 500 reached a new all-time high in December, adding pressure on Bitcoin investors. Continued Fed rate cuts tend to lift equities by lowering corporate borrowing costs and improving consumer credit conditions, which reduces Bitcoin’s attractiveness as an independent hedge.
Bitcoin’s struggle to sustain the $90,000 level reflects broader trader risk sentiment, as the cryptocurrency has yet to cement its role as a reliable store of value amid a global economic slowdown.
If investments in artificial intelligence achieve expected returns, major tech firms such as Microsoft (MSFT US), Nvidia (NVDA US), and Google (GOOG) could unlock additional valuation upside, potentially driving equity markets to fresh all-time highs.
Bitcoin hash rate decline raises concerns
Bitcoin mining has also come under scrutiny as rising energy costs squeeze profitability. Investors worry that miners are operating at very thin—or even negative—margins.
Tighter operating cash flows have forced miners to increasingly rely on debt and equity-linked financing to maintain liquidity, including secondary share offerings. Meanwhile, the network’s hash rate has edged lower after peaking in late October, raising questions about the market’s near-term health.
However, VanEck analysts contend that Bitcoin miner capitulation can serve as a “historically bullish contrarian signal.” In a report by VanEck crypto research lead Matt Sigel, data showed that Bitcoin’s 90-day forward returns have been positive roughly 65% of the time following 30-day periods of network hash rate decline. The recent drop in hash rate was largely attributed to the shutdown of 1.3 gigawatts of mining capacity in China.
Another factor dampening investor appetite near the $87,000 level is the compression of valuation multiples among digital reserve asset companies. There is limited incentive to issue shares below the market value of their underlying Bitcoin holdings. For instance, MicroStrategy (MSTR US) traded at a 16% discount, while Twenty One Capital (XXI US) was valued 18% below its reserves, according to BitcoinTreasuries.
Ultimately, Bitcoin’s path forward hinges on a shift in risk perception that favors its “digital gold” narrative—a process that may take time as investor attention remains focused on broader global economic growth risks.
