When Traditional Assets Win: Why Bitcoin Struggles at $90K and What's Behind the Shift

Bitcoin’s recent price action tells a story of shifting investor preferences. While BTC trades around $92.52K (down 1.13% in 24 hours), the cryptocurrency’s failure to decisively break through $90,000 on Monday—which triggered nearly $100 million in liquidations across leveraged positions—reveals deeper market dynamics at play. The question isn’t whether Bitcoin will reach $100K, but whether the “digital gold” narrative still resonates when gold itself, bonds, and equities are stealing the spotlight.

The Case for Caution: Why Stocks and Bonds Are Winning

The U.S. equity market’s record-setting rally in December poses the most direct threat to Bitcoin’s bull thesis. The S&P 500 hitting historic highs contradicts the traditional hedge argument—if stocks are booming, why would risk-conscious investors rotate into Bitcoin? Meanwhile, gold maintains strength above $4,300, capturing the risk-aversion flows that might otherwise flow into crypto.

The Federal Reserve’s interest rate environment plays a crucial role here. Lower rates should theoretically favor Bitcoin by eroding the appeal of bond yields. Yet U.S. Treasuries remain attractive amid expectations of widening fiscal deficits and the impending refinancing of approximately $10 trillion in U.S. debt. The Rockefeller Global Family Office’s analysis highlights how central banks are using financial repression tools—keeping yields artificially low—which paradoxically makes bonds competitive against Bitcoin as a store of value.

Labor market data complicates the narrative further. The 4.6% unemployment rate marks a four-year high, signaling economic stress that typically would prompt aggressive Fed stimulus. However, persistent inflation concerns keep policymakers cautious, creating a “goldilocks recession” scenario where neither aggressive stimulus nor aggressive tightening occurs—the worst outcome for Bitcoin’s crisis hedge appeal.

Bitcoin Mining Under the Microscope: Energy Costs Squeeze Margins

Behind Bitcoin’s price hesitation lies a structural problem: mining profitability is under pressure. Rising energy costs have compressed miner margins substantially, forcing companies to seek debt and equity financing just to stay operational. This has triggered secondary share offerings among publicly traded miners and contributed to declining hash rates across the network.

The hash rate decline, while concerning on the surface, might contain a silver lining. VanEck research suggests that periods of falling hash rates have historically preceded positive Bitcoin returns, positioning this as a potential contrarian buy signal. The recent 1.3-gigawatt mining capacity shutdown in China—attributed to regulatory and seasonal factors—partially explains the decline, yet demonstrates how concentrated mining operations remain vulnerable to geopolitical shifts.

However, investor skepticism persists. Mining companies trading below the value of their Bitcoin treasuries (as tracked by BitcoinTreasuries.com) suggest that equity markets aren’t pricing in an imminent recovery. Strategy and Twenty One Capital both trade at significant discounts to their holdings, indicating deep doubt about near-term adoption catalysts.

The Bigger Picture: Digital Gold or Yesterday’s Story?

The crypto market’s broader dynamics matter too. While Bitcoin struggles for momentum, competing narratives around Solana and other Layer-1 platforms have attracted developer attention and user growth, fragmenting crypto’s value proposition. Traditional finance isn’t standing still either—Goldman Sachs and other institutional players continue building digital asset infrastructure, but their focus has broadened beyond Bitcoin alone.

The path forward for Bitcoin hinges on whether the market rediscovers conviction in its digital gold thesis or whether macroeconomic uncertainty keeps capital flowing toward proven hedges like gold, bonds, and large-cap equities. For now, the $90K level remains a line in the sand—break it convincingly, and momentum could shift; fail again, and questions about Bitcoin’s role in a portfolio dominated by AI-driven equity gains and financial repression will only deepen.