Bitcoin faces challenge in its protection proposal as the market splits with divergence in unemployment pressure

Since its creation in 2009, the main cryptocurrency has been considered a safe haven asset against financial mismanagement and political turbulence. However, recently, this narrative faces a clear divergence: while US unemployment data create contradictory pressures on Federal Reserve policies, Bitcoin ceases to fulfill its traditional protective role. This scenario reveals one of the biggest discrepancies in the modern financial market.

The situation intensified when the home of a Fed chair was subject to criminal investigation. Powell described the action as political pressure on the institution’s independence, an attempt to force him to cut interest rates aggressively as requested by the acting president. In this context, which should favor safe haven assets, Bitcoin’s behavior surprised: gold hit record highs of over $4,600 per ounce, while the leading cryptocurrency oscillated uncertainly.

The divergence between market safety: when gold surpasses Bitcoin

Traditional safe assets responded as expected to political turbulence. Gold rose to historic highs above $4,600 per ounce, and silver reached $84 per ounce. However, Bitcoin showed contradictory movement. It started positively at $92,000 during the Asian trading session, suggesting a search for protection. The divergence appeared when the price retreated to $90,500 during the European period.

Currently, Bitcoin is trading around $78.10K with a 3.75% drop in the last 24 hours, while Ethereum depreciates 6.48% to $2.36K. This performance contrasts with gold’s record, highlighting that the divergence between safe haven markets has never been so clear. Institutional investors, who should be migrating to cryptocurrencies as a hedge, are opting for gold and traditional assets.

The central question is: why the divergence? US unemployment data released by the Bureau of Labor Statistics created a confusing scenario. The decline in the unemployment rate should result in inflationary pressure, preventing Fed rate cuts. ING analysts warn that higher-than-expected inflation this week could keep interest rates high until March, creating a divergence between market expectations and what monetary policy can deliver.

Political pressures and unemployment data complicate Fed’s trajectory

The divergence in expectations about monetary policy is key to understanding the behavior of safe assets. The 10-year Treasury yield remains near 4.2%, with the 2-year yield at 3.54%, the highest in two weeks. These numbers indicate that markets do not expect Powell to yield to political pressure and cut rates aggressively.

Unemployment data create an interesting divergence: technically, a decrease in unemployment would suggest rising inflation and higher rates. But political circumstances suggest pressure for cuts. This contradiction between economic safety (data) and political reality leaves investors confused about which asset truly offers protection.

The Monero currency, focused on privacy, reflected this search for protection better, rising from initial levels with gains of 15% in the last 24 hours. Other currencies like ZEC, RENDER, and CC also showed gains of 4% to 5%, suggesting that risk appetite divergence is not uniform in the crypto market. While Bitcoin retreats, certain segments continue to seek alternatives.

Selective capital flows reveal risk appetite divergence

Bitcoin and Ethereum ETF flows show the divergence clearly. From January 5 to 9, Bitcoin spot ETFs recorded net outflows of $681 million, despite high trading volumes of $19.5 billion. For Ethereum, weekly outflows reached $69 million. This high volume and capital outflow divergence suggest active repositioning rather than total disengagement.

Meanwhile, XRP and SOL ETFs continued attracting capital, reinforcing the idea that divergence in the crypto market is selective. Investors are choosing their assets carefully, avoiding concentration in Bitcoin as a universal safe haven. Timothy Misir, head of research at BRN, described this as “a theme of selective risk appetite rather than broad.”

This capital allocation divergence also appears in implied volatility indices. The 30-day implied volatility indices for BTC and ETH hover at the lowest levels in weeks, suggesting derivatives indicate a less promising short-term market. Derivative operator complacency contrasts with the reality of unemployment data and political pressures.

What to watch: evolving regulation

The divergence between expectations and reality also appears in the regulatory sphere. Starting January 12, Dubai Financial Services Authority implemented its revamped regulatory framework for crypto tokens. This new approach eliminates the list of recognized tokens and makes companies responsible for asset compliance, creating a divergence from previous more permissive regulations.

UK lawmakers are also pushing to ban political donations in cryptocurrencies, citing fears of foreign interference. This regulatory divergence between jurisdictions reflects growing concern over the relationship between cryptocurrencies, politics, and security.

Market movements and reference data

Key indicators clearly show the divergence in market forces:

• Bitcoin: $78.10K (down 3.75%)
• Ethereum: $2.36K (down 6.48%)
• BTC dominance: 59.11%
• DXY Index: 98.84 (down 0.30%)
• Gold: $4,602.90 (up 2.27%)

US stock indices show relative resilience: S&P 500 up 0.93%, Nasdaq Composite up 1.18%. This divergence between stocks and cryptocurrencies reflects uncertainty about which market offers better protection amid political pressures and contradictory unemployment data.

Ongoing events and governance

Two important DAO votes occur on January 12. Extra Finance DAO votes on the distribution of loan emissions for Epochs 131 to 134, while Treehouse DAO implements its mesh bridge via Chainlink CCIP. These events, though significant for their ecosystems, reflect a focus divergence in the crypto market between major narratives (protection, Fed policy) and specific protocol innovations.

Conclusion: navigating the divergence

The divergence between market safety, unemployment data, political pressures, and crypto asset responses creates a complex scenario. Bitcoin fails in its immediate task of being a perfect hedge against political turbulence, while gold thrives. Unemployment data create divergences in interest rate expectations. ETF flows reveal risk appetite divergence, with investors being selective rather than seeking universal refuge.

For investors and market observers, the challenge is to navigate this divergence in market safety and recognize that different assets serve different roles in different scenarios. Next week, with inflation data releases, these divergences in expected asset behavior may clarify or deepen.