Main points to note:
Bitcoin struggled to surpass $90,000 again as investors turned to gold and bonds.
S&P 500 reaching all-time highs and reduced interest rates have diminished Bitcoin’s attractiveness as a hedge in comparison to traditional equities.
BTC price recovery stalls at $90,000
Bitcoin (BTC) faced significant resistance near $90,000 on Monday, leading to nearly $100 million in liquidations across leveraged positions.
Heightened interest in traditional hedges like gold and US government bonds has caused traders to question whether Bitcoin can regain its momentum to reach the $100,000 mark.
Gold prices remained above $4,300 on Monday, while yields on the 2-year US Treasury fell to their lowest since August 2022. The growing demand for government-backed assets suggests a broader aversion to risk, especially as the US fiscal deficit is anticipated to widen in 2026. The US Treasury is also tasked with rolling over roughly $10 trillion in debt over the year.
Jimmy Chang, chief investment officer at Rockefeller Global Family Office, reportedly informed Reuters:
“We are in an era of financial repression where governments are employing various methods to keep bond yields artificially low.”
Conversely, the negative effects of US import tariffs on economic growth have been mitigated by extensive investments in artificial intelligence infrastructure, according to Yahoo Finance.
Investors cautious about Bitcoin amidst rate cuts
The sentiment among investors has weakened since the US Department of Labor reported a 4.6% unemployment rate for November, the highest in four years. Typically, such data would lead traders to expect a more aggressive stimulus approach from the US Federal Reserve (Fed). However, inflation risks are significantly limiting this expectation.
Regardless, the S&P 500 achieved a new all-time high in December, creating further unease among Bitcoin investors. If the Fed continues to lower interest rates, equities tend to rise due to the direct effect on corporate balance sheets.
Decreasing capital costs bolster higher valuations, improving consumer credit conditions as well. Consequently, the allure of Bitcoin as an independent hedge becomes less appealing.
Bitcoin’s struggle to maintain the $90,000 level signifies traders’ risk perceptions, as the cryptocurrency has yet to establish itself as a dependable store of value in a global recession.
Should investments in artificial intelligence yield expected returns, major tech firms like Microsoft (MSFT US), Nvidia (NVDA US), and Google (GOOG) could experience additional valuation growth, potentially leading equity markets to new record highs.
Bitcoin hash rate decline: A bearish sign?
Bitcoin mining has come under scrutiny due to rising energy costs. Investors fear miners are operating at very low or even negative margins.
Compressed operating cash flows have driven miners to increasingly depend on debt and equity-linked financing to maintain liquidity, which includes secondary share offerings. Simultaneously, the network hash rate has shown a slight decline after peaking in late October.
Nonetheless, analysts at VanEck assert that Bitcoin miner capitulation has historically signaled bullish outcomes. A report by VanEck’s crypto research lead Matt Sigel indicated that Bitcoin’s forward returns over 90 days have historically been positive 65% of the time after 30 days of declining network hash rates. The recent hash rate drop is attributed to the shutdown of 1.3 gigawatts of mining capacity in China.
Related: Strategy’s latest 2025 Bitcoin purchase caps an active year of accumulation
Another reason for investors hesitating to increase exposure around the $87,000 level is the shrinking valuation multiples among companies holding digital reserve assets. There is limited motivation to issue shares below the market value of their underlying Bitcoin reserves.
For instance, Strategy (MSTR US) traded at a 16% discount, while Twenty One Capital (XXI US) was valued 18% below its reserves, as per BitcoinTreasuries.
Ultimately, Bitcoin’s future trajectory hinges on a change in risk perception favoring the digital gold narrative. This transition may take time as the focus remains on global economic growth risks.
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