Key Takeaways:
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Bitcoin did not break $90,000 again as investors favored gold and bonds.
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Record highs for the S&P 500 and lower rates of interest have reduced Bitcoin's appeal as a hedge in comparison with traditional stocks.
BTC price recovery stalls at $90,000
Bitcoin (BTC) faced strong rejection near $90,000 on Monday, resulting in liquidations of nearly $100 million in leveraged positions.
Strong demand for traditional hedges like gold and U.S. Treasuries led traders to query whether Bitcoin has the momentum needed to recapture $100,000.
Gold/USD (left) vs. 2-year Treasury yield. Source: TradingView
Gold prices held above $4,300 on Monday while two-year U.S. Treasury yields fell to their lowest level since August 2022. Rising demand for government-backed assets signals broader risk aversion, particularly because the U.S. budget deficit is predicted to widen in 2026.
Jimmy Chang, chief investment officer of the Rockefeller Global Family Office, reportedly told Reuters:
“We are within the age of monetary repression, with governments using various tools to artificially limit bond yields.”
Meanwhile, the negative impact of US import tariffs on economic growth was offset by massive spending on artificial intelligence infrastructure, in keeping with Yahoo Finance.
Investors are wary of Bitcoin amid rate of interest cuts
Investor sentiment has worsened because the U.S. Labor Department reported a U.S. unemployment rate of 4.6% in November, the best level in 4 years. Under normal circumstances, such data would lead traders to lift expectations of more aggressive stimulus policy from the US Federal Reserve (Fed). But this time, inflation risks have change into a major obstacle.
Nevertheless, the S&P 500 rose to a brand new all-time high in December, adding to the uncertainty amongst Bitcoin investors. If the Fed continues to chop rates of interest, stocks are likely to rise attributable to the direct impact on corporate balance sheets.
Lower capital costs are supporting higher valuations, while consumer credit conditions are also improving. This makes Bitcoin less attractive as an independent hedge.
S&P 500 futures (left) vs. Bitcoin/USD. Source: TradingView
Bitcoin's difficulty holding $90,000 reflects traders' perception of risk because the cryptocurrency has yet to determine itself as a reliable store of value amid a world recession.
If investments in artificial intelligence deliver expected returns, big tech corporations like Microsoft (MSFT US), Nvidia (NVDA US) and Google (GOOG) could unlock additional valuation potential and potentially push stock markets to latest all-time highs.
Bitcoin hash rate is falling: is that this pessimistic?
Given the rising energy costs, Bitcoin mining has also come into focus. Investors fear that miners are operating on extremely low and even negative margins.
Tighter operating money flows have resulted in miners turning more regularly to debt and equity financing to take care of liquidity, including secondary equity offerings. Meanwhile, the network hash rate has declined barely after peaking in late October.
Estimated Bitcoin hash rate, petahashes/second. Source: Coinmetrics.io
However, VanEck analysts argue that the capitulation of Bitcoin miners is “historically a bullish, contrarian signal.” A report by VanEck head of crypto research Matt Sigel said that Bitcoin's 90-day forward returns have been positive 65% of the time following 30-day periods of network hashrate declines previously. The report attributed the recent hash rate decline to the shutdown of 1.3 gigawatts of mining capability in China.
Another factor behind investors' reluctance to extend their exposure near the $87,000 level is the decline in valuation metrics for digital reserve asset corporations. There is little incentive to issue stocks below the market value of their underlying Bitcoin holdings.
For example, Strategy (MSTR US) was trading at a 16% discount, while Twenty One Capital (XXI US) was valued 18% below its reserves, in keeping with BitcoinTreasuries.
Ultimately, Bitcoin's development will depend on a shift in risk perception that favors the digital gold narrative. This process may take longer as attention stays focused on the risks to global economic growth.
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