Bitcoin has failed to sustain levels above $92,000 over the past month, with explanations for the price weakness ranging from market manipulation claims to concerns about the artificial intelligence sector, though evidence is lacking. While the S&P 500 remains close to its all-time high, Bitcoin trades 30% below its October peak, reflecting increased risk aversion. Gold has become the preferred hedge amid economic uncertainty. The US Federal Reserve’s ongoing balance sheet reduction is restricting market liquidity, limiting Bitcoin’s upside. Deteriorating US economic data and reduced consumer spending have driven retailers like Target, Macy’s, and Nike to issue warnings or report declining sales, historically creating a bearish environment for risk assets such as Bitcoin. Despite some signals of a shift toward looser monetary policy, traders doubt the Fed’s ability to significantly cut rates in the near term. Firm demand for US Treasurys and weak demand for Japanese government bonds further indicate risk aversion. Japan’s GDP contraction and ongoing negative interest rates underscore broader global growth concerns. As risk appetite fades, Bitcoin’s positive response to rate cuts and stimulus also wanes, diminishing its appeal as an alternative hedge in the near future.

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