Bitcoin Stalls Below $90K as Risk Aversion Grows and Fed Rate Cut Hopes Fade

Bitcoin Faces Resistance as Investors Shift to Safety

Bitcoin continues to struggle near the $90,000 level after several failed attempts to reclaim the $92,000 zone over the past month. At the time of writing, Bitcoin is trading near $88,238, well below its October high of $126,200, as investors reduce exposure to higher-risk assets.

While U.S. equities remain relatively stable, the divergence between Bitcoin and traditional markets reflects a broader move toward capital preservation rather than speculative positioning.

Gold Outperforms as a Preferred Hedge

Despite Bitcoin’s long-term appeal as a decentralized asset, gold has emerged as the preferred hedge during the current period of economic uncertainty.

Rising demand for precious metals coincides with firm demand for U.S. Treasurys and declining expectations for Federal Reserve rate cuts.

Gold price movements and market trends can be tracked here

This shift suggests investors are prioritizing assets with historically lower volatility when macroeconomic risks intensify.

Federal Reserve Liquidity Drain Limits Bitcoin Upside

One of the main factors constraining Bitcoin’s upside is the Federal Reserve’s ongoing balance sheet reduction through much of 2025. This process has drained liquidity from financial markets, a condition that typically weighs on risk-sensitive assets such as cryptocurrencies.

Although signs of economic slowdown in December briefly raised expectations for a less restrictive policy stance, traders remain uncertain whether interest rates can sustainably fall below 3.5% in 2026.

Weak Consumer Data Adds to Risk Aversion

Recent earnings warnings from major U.S. retailers have reinforced concerns about slowing consumer demand:

• Target lowered its fourth-quarter earnings outlook on Dec. 9

• Macy’s warned on Dec. 10 that inflation pressures could hurt holiday margins

• Nike reported a quarterly sales decline on Dec. 18, sending its shares down 10%

Historically, weaker consumer spending environments reduce appetite for assets perceived as higher risk, including Bitcoin.

Rate Cut Expectations Continue to Decline

According to the CME FedWatch Tool, the probability of a rate cut at the Jan. 28 FOMC meeting fell to 22%, down from 24% the previous week.

At the same time, demand for U.S. government debt remained strong, with the 10-year Treasury yield holding near 4.15%, signaling persistent caution among institutional investors.

Global Pressures Intensify as Japan Shows Stress

Outside the U.S., rising yields in Japan have added to global market unease. Weak demand for Japanese government bonds pushed 10-year yields above 2%, the highest level since 1999.

Japan’s 2.3% annualized GDP contraction in Q3, combined with its large monetary base of $4.13 trillion, increases the risk of spillover effects into global markets.

Conclusion: Bitcoin Remains Range-Bound in the Near Term

Bitcoin’s inability to decisively break above $90,000 reflects mounting uncertainty around global growth, labor market weakness, and tighter financial conditions. As investors continue to favor Treasurys and gold, Bitcoin’s role as a near-term hedge remains limited.

Until liquidity conditions improve and macroeconomic clarity returns, Bitcoin is likely to remain capped below key resistance levels.

See all our insights: Bitcoin World News