Bitcoin Fails to Reclaim $90K: Traditional Assets Dominating as Safe-Haven Demand Surges

Bitcoin faced renewed selling pressure at $90,000 on Monday, with nearly $100 million in liquidations wiping out leveraged traders. Current market sentiment reveals a significant rotation: investors are abandoning the “digital gold” narrative in favor of established hedges like physical gold (trading above $4,300) and U.S. Treasury bonds, signaling widespread risk-aversion despite Bitcoin’s current price of $91.15K.

The Case for Traditional Hedges Over Digital Assets

The shift in investor preference reflects deeper macroeconomic concerns. Rising fiscal deficit expectations and an estimated $10 trillion rollover in U.S. debt maturing soon have reinvigorated demand for Treasuries. Institutions like Goldman Sachs have noted the deployment of financial repression strategies to manage bond yields, creating an attractive risk-reward for traditional fixed income. Meanwhile, the S&P 500 hitting record highs in December has outpaced alternative stores of value, drawing capital away from Bitcoin as a portfolio diversifier.

Even emerging cryptoassets like Solana have struggled to capture sustained institutional interest amid this risk-off environment. The lower interest rate regime, paradoxically, hasn’t boosted Bitcoin’s appeal—instead, it’s fueling equity valuations and improving credit conditions for corporations, reducing urgency for uncorrelated hedges.

Economic Headwinds: Unemployment and Market Positioning

The U.S. Department of Labor’s December report revealed a 4.6% unemployment rate, the highest in four years, creating mixed signals for monetary policy. Historically, such labor market weakness would trigger Fed rate cuts, but persistent inflation concerns have tempered those expectations. This uncertainty has created a bifurcated market: growth assets rally on lower-for-longer rate scenarios, while defensive assets like gold and bonds capture flows seeking stability.

Bitcoin’s positioning has suffered as a result. Investors are questioning whether digital gold can deliver alpha in an environment where real yields remain elevated and traditional equities are thriving on AI infrastructure investment momentum.

Mining Under Siege: Cost Pressures and Hash Rate Decline

Bitcoin mining has entered a challenging phase. Rising energy costs are compressing miner margins, forcing operators to pursue aggressive financing—debt issuance and equity offerings—to sustain operations. Hash rates have declined notably, partly due to the shutdown of 1.3 gigawatts of Chinese mining capacity, adding structural headwinds to the sector.

However, contrarian analysts at firms like VanEck argue that declining hash rates historically precede rallies, suggesting the current pain for miners could signal capitulation lows. This thesis remains unproven, as companies holding Bitcoin treasuries now trade below the value of their digital asset holdings, reflecting investor pessimism about near-term price momentum.

What’s Next for Bitcoin?

The path forward depends on a fundamental shift in sentiment: a restoration of Bitcoin’s digital gold narrative or a clear catalyst for monetary accommodation. For now, the macro environment—strong equities, resilient credit conditions, and bond demand—is working against the case for uncorrelated hedges, leaving Bitcoin vulnerable to further consolidation below $100,000.