Gold and bonds lead the way.

Main Receptors:

Bitcoin fails to break $90,000 again as investors prefer gold and bonds.

S&P 500 high interest rates and low interest rates compared to traditional stocks have reduced Bitcoin's appeal as a hedge.

Table of Contents

Toggle

BTC price recovery stops at $90,000

Bitcoin (BTC) suffered a sharp decline around $90,000 on Monday, prompting a nearly $100 million shortfall in leveraged positions.

Demand for traditional hedges such as gold and US government bonds has led traders to question whether bitcoin has the momentum needed to reclaim the $100,000 level.

Gold prices held above $4,300 on Monday and two-year US Treasury yields fell to their lowest level since August 2022. Rising demand for government-backed assets reflects broader concerns, particularly the US fiscal deficit in 2016.

Jimmy Chang, chief investment officer of the Rockefeller Global Family Office, told Reuters.

“We are in financial distress where governments are using various instruments to artificially inflate bond yields.”

Meanwhile, the negative impact of US tariffs on economic growth has been offset by spending on artificial intelligence infrastructure, according to Yahoo Finance.

Investors are wary of Bitcoin during the downturn

Investor sentiment has been dampening since the US Labor Department reported a November US unemployment rate of 4.6%, the highest level in four years. Under normal circumstances, such data would lead traders to expect a more aggressive stimulus stance from the US Federal Reserve. But this time, inflationary concerns have become a major limitation.

Even so, the S&P 500 surged to a new all-time high in December, adding to unease among Bitcoin investors. If the Fed continues to cut interest rates, stocks could rise due to the direct impact on corporate balance sheets.

Lower capital costs support higher valuations, and consumer credit conditions improve. As a result, Bitcoin's appeal as an independent hedge becomes less compelling.

Bitcoin's difficulty in holding the $90,000 level reflects traders' perception of risk, as the cryptocurrency has yet to establish itself as a reliable store of value amid a global downturn.

If investments in artificial intelligence bear fruit, major tech companies like Microsoft ( MSFT US ), Nvidia ( NVDA US ) and Google ( GOOG ) could unlock more value and push equity markets to new all-time highs.

Bitcoin Hash Rate Drops: Is It Bearish?

Bitcoin mining has come into focus as energy costs continue to rise. Investors worry that miners are operating at very low, even negative, margins.

Tight cash flows have often forced miners to rely on debt and equity-linked financing, including secondary stock offerings. Meanwhile, the network's hash rate has dropped since peaking in late October.

However, VanEck analysts argue that Bitcoin mining capital has “historically been the opposite of bullish.” According to a report by Matt Siegel, head of crypto research at VanEck, Bitcoin's 90-day forward returns have historically been 65% positive following declines in network hashrate. The report attributed the shutdown of 1.3 gigawatts of mining capacity in China to the recent slowdown in hashrate.

Related: The Strategy's Latest 2025 Bitcoin Purchases Will End the Year of the Gathering

Another reason investors are reluctant to increase exposure around $87,000 is valuation multiples among digital reserve asset companies. There is little incentive to issue shares below the market value of the underlying Bitcoin holdings.

For example, Strategy (MSTR US) is trading at a 16 percent discount, while Twenty One Capital (XXI US) is valued at 18 percent below its reserve, BitcoinTreasuries reports.

Ultimately, Bitcoin's trajectory depends on a shift in risk perception that supports the digital gold narrative. This process may take longer as attention is focused on global economic growth.

This article is not intended for general information purposes and should not be construed as legal, tax, investment, financial or other advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph shall not be liable for any loss or damage arising from reliance on this information.