Here’s Why Bitcoin Is Failing the One Test It Was Supposed to Pass

In recent weeks, Bitcoin has seen a significant exodus in market capitalization. While pullbacks have happened many times before, this is the first phase where Bitcoin is declining while most other asset classes are surging. It is now moving inversely to precious metals, tech stocks, the AI-driven equity bubble, and commodities. Historically, Bitcoin often moved in sync with these assets. That relationship has clearly broken.

Below are the key factors showing why we are entering a critical phase for global markets and geopolitics, and why Bitcoin is structurally weak in this environment. From rising interest rates and tighter liquidity to geopolitical tensions and accelerating industrial demand for metals, the global financial system is under pressure in ways that favor real, tangible assets over speculative ones like Bitcoin. At the same time, retail investors, the primary source of demand for crypto, are losing interest, exhausted by constant declines and frustrated that traditional assets are outperforming.

Recent headlines have been dominated by gold and silver repeatedly setting new all-time highs, often on a daily basis. This is not surprising. Periods of heightened geopolitical tension consistently drive capital into hard assets.

We are seeing escalating global stress driven by Donald Trump’s tariff actions against the European Union, renewed territorial ambitions such as Greenland, expectations of Federal Reserve rate cuts, tighter financial conditions, and most importantly, surging industrial demand for metals. Solar energy, electric vehicles, electronics, and AI infrastructure are consuming massive quantities of physical resources, and that demand is only accelerating.

Since the beginning of recorded markets, precious metals have functioned as risk-off assets. When uncertainty rises, capital flows into gold and silver. Investors have every reason to be cautious right now. Global tensions are rising again, and unlike earlier periods this year, this phase feels more structural than temporary.

From Venezuelan raids to Iranian protests, 2026 is shaping up to be a year defined by disruption. These are not isolated incidents or short-term news cycles. They are the result of decades-long grievances and unresolved power struggles that continue to resurface. At the same time, the world faces mounting pressure from artificial intelligence disruption, renewed rivalry with Russia / China, and the inevitable renegotiation of land borders and spheres of influence.

Overlay this with an economic system stretched to its limits, propped up by constant distractions and narrative management, and the picture becomes clear. These are not random shocks. They are symptoms of deeper structural stress.

Precious metals are responding exactly as they always have. Bitcoin, however, is not. For years, Bitcoin maxis claimed that during times of crisis, Bitcoin would outperform everything. They described it as a black hole, drawing in all capital with unstoppable momentum. In reality, Bitcoin is one of the worst-performing assets on the market. It is being outperformed by nearly everything, including gold, silver, oil, major stocks like Apple and Tesla, and even meme coins like Fart Coin, yet it is still trading around the same price it was three years ago. During times of crisis, it is flat-lining, demand has become non-existent, and investors are walking toward the exits, soon to be running.

While gold and silver are attracting sustained safe-haven demand due to geopolitical escalation, expectations of Federal Reserve easing, tightening physical supply, and accelerating industrial usage, cryptocurrencies are failing to capture that same capital. The market is signaling, very clearly, that Bitcoin is no longer viewed as a true hedge in times of real-world risk.

Bitcoin is falling because the market no longer treats it as a hedge or a risk-on macro asset. Real capital is flowing back into traditional stores of value and productive growth assets instead.

The correlations that once pulled Bitcoin higher alongside stocks, commodities, or metals have broken, arguably for the first time.

To understand why Bitcoin isn’t rising, you have to understand why it ever went up in the first place. That part is simple if you look at how mainstream media covered it, how it was marketed, and, most importantly, the narratives invented around its supposed utility and purpose.

Bitcoin rises on narrative, not fundamentals. For years, these narratives came from every direction because they generated headlines and benefited early holders. We saw repeated claims that Apple or Amazon were investing billions into BTC, that dozens of countries were secretly stockpiling it, as loudly implied by Michael Saylor, or that the US government would begin actively buying it. Every one of these stories failed. When examined individually, none were true, and none were meaningful.

All of these tactics have been tried and exhausted, and now we’re in a dry season. There’s nothing left to drive Bitcoin higher. If someone claims that a random country, let’s say Cuba, is going to buy 100 BTC, so what? No one will buy BTC because of this news, no one cares, frankly. The cow has already been milked dry, and it no longer moves the market. We’re still early in this phase, but you’ll see this trend intensify in the coming months.

Even today, Michael Saylor of MicroStrategy announced that they bought $2 billion in Bitcoin. BTC immediately tanked and has now wiped out all gains for the year. And for those defending him by saying he is showing true conviction and questioning how that could be bad, they need to understand that he is running a giant Ponzi and diluting shareholders with his actions. I will write an entirely separate article on why he will end up in jail, so stay tuned for that one. It will be juicy.

Bitcoin’s demand comes almost entirely from speculative gambling. Bitcoiners deny this, but everyone knows it’s true. People buy Bitcoin hoping it goes higher so they can get richer in fiat. That alone contradicts Bitcoin’s original purpose. The whitepaper described a peer-to-peer payment system. When it failed as a currency, the narrative shifted to “store of value,” despite no mention of that in the whitepaper. When that failed, it became an “inflation hedge.” When inflation surged and Bitcoin collapsed, the narrative shifted again. It’s an endless game of musical chairs designed to distract new investors from the reality that Bitcoin’s only remaining function is speculation.

Another major reason Bitcoin is failing is liquidity. The era of free money is over. Higher real interest rates, tighter financial conditions, and governments draining excess liquidity have crushed assets that rely on constant inflows of new capital. Bitcoin has no cash flows, no yield, and no intrinsic demand, so when liquidity dries up, there is nothing underneath it to support price.

Tether, the engine behind Bitcoin’s historic rise past $1,000 through unregulated money printing and market injections, is now facing serious regulatory pressure on multiple fronts.

In the EU, the Markets in Crypto‑Assets (MiCA) rules force stablecoin issuers to meet strict requirements for reserves, transparency, licensing, and auditing. Tether’s USDT fails to meet these standards, forcing many exchanges to delist or restrict it, and Tether has even shut down its euro stablecoin (EURT) rather than comply.

In the U.S., the GENIUS Act and other stablecoin legislation give regulators direct authority over dollar‑pegged tokens, requiring full reserves and strict adherence to banking and anti‑money‑laundering rules. On top of that, the Clarity Act, which Coinbase had initially supported, seeks to define regulatory authority over digital assets and restrict stablecoin incentives that currently drive liquidity.

This creates another layer of pressure on Tether, limiting its ability to freely inject liquidity into crypto markets and undermining the unregulated leverage that fueled Bitcoin’s earlier rallies.

They’ve gone quiet in recent months and shifted focus toward products like Tether Gold (XAU₮), allegedly backed by gold, instead of pushing unregulated crypto narratives. They know Bitcoin’s hype machine is exhausted, and you should understand that before the masses catch on.

The truth is: Bitcoin had its run. As the world enters a more constrained economic environment, its purpose has faded. In a recession, people are not saving spare cash to open leveraged BTC trades on exchanges. When the downturn fully hits, the crypto market will dry up fast, worse than anything we’ve seen before, because this is where excess money went during the bubble years.

I could answer the original question this article aims to answer, why Bitcoin is failing the one test it needed to pass, simply by saying Bitcoin fails its “one test” because it cannot operate as a functional currency, what it was invented for. But as I mentioned earlier, the goalposts are endlessly moved. If you argue this, maxis will just claim it’s not for payment currency, despite that Satoshi literally said so in the whitepaper, a document they’ve definitely never read.

The hype is gone. Bitcoin is no longer “hot”; it’s boring. Retail investors are tired, exhausted by constant red, and frankly jealous that metals and stocks are hitting new highs. The crowd investing in this junk is chasing quick gains, not long-term value. When the market stops delivering, it ends, and the effect snowballs. We’re in the very early stages of the snowman melting, and I warn everyone reading this: you still have some, but barely any, time to get out. Do what’s logical and exit before it’s too late.

Boring works for other assets, like gold, which is largely held by boomers and investment firms, but for Bitcoin, it’s kryptonite. If you understand the type of people who invest in BTC, you know they aren’t patient, they have little market knowledge, and they are highly emotional and reactive.

Thanks for reading. I write these articles because I enjoy breaking down markets and explaining what’s really happening behind the headlines. If you have any feedback or ideas you want me to write about, let me know.

This piece is meant to give a clear-eyed view of Bitcoin’s current state, why it’s failing the test it was designed to pass, and what that means for investors. I’ll continue producing articles that dig into these trends and highlight what’s actually moving markets.