Bitcoin and gold have become the worst-performing major assets of 2026, with the simultaneous downturn challenging their status as portfolio hedges during a Federal Reserve-driven liquidity squeeze.
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Bitcoin, gold slide 31% and 6% in 2026 as liquidity tightens
Bitcoin and gold have become the worst-performing major assets of 2026, with the simultaneous downturn challenging their status as portfolio hedges during a Federal Reserve-driven liquidity squeeze.
Bitcoin fell 31% and gold 6% year-to-date in 2026, the worst among major assets, as a Fed-driven liquidity squeeze tightened conditions.
"Prediction markets now assign a lower probability to Bitcoin reaching $100,000 by year-end compared with January, reflecting the shift in macro conditions," according to data from major forecasting platforms.
Bitcoin has traded below $70,000, a level it last held in February, while gold has retreated from its January high. The Bitcoin-to-gold ratio has fallen significantly, suggesting potential undervaluation of Bitcoin relative to gold. The dual decline marks an unprecedented simultaneous downturn for both assets, historically viewed as portfolio diversifiers. More than $400 million in leveraged crypto positions were liquidated in a single day, according to Coinglass data.
The Federal Reserve's next policy meeting in July will be the key event for both assets. Any signal of a pivot toward looser policy could reverse the trend, while continued hawkishness risks further downside. Bitcoin's next major support lies near $65,000, a level that has held since early 2025.
Liquidity Squeeze Hits Both Assets
The simultaneous decline in Bitcoin and gold reflects a broader macro environment where a stronger US dollar and elevated Treasury yields are draining liquidity from risk assets. The US Dollar Index has strengthened as the Fed maintains its hawkish stance, with the 10-year Treasury yield hovering near multi-year highs. This environment has historically been challenging for both cryptocurrencies and precious metals, which tend to benefit from loose monetary policy.
What to Watch
Investors are closely monitoring the Fed's July meeting for any shift in language around rate cuts. The CME FedWatch tool currently prices in a less than 30% probability of a rate cut by September, down from over 50% in January. For Bitcoin, ETF flow data will be critical — sustained outflows from spot Bitcoin ETFs could accelerate the selloff. Gold faces similar headwinds, with holdings in major gold ETFs declining this quarter.
This article is for informational purposes only and does not constitute investment advice.
