The K-line for gold and silver has risen sharply, while the trend of cryptocurrencies is like a cow stuck in a quagmire; behind this asset rotation drama is the code of liquidity reallocation.
I've been watching the market this week, and suddenly I have a strange illusion: gold and silver seem to be drunk, staggering as if they want to rush to the sky; while cryptocurrencies seem to have been paused, consolidating sideways to the point of anxiety. Just yesterday, spot gold once again refreshed its historical high, and silver was not to be outdone, with a single-day increase of over 6%.
This extreme polarization has made me realize that the market is staging a silent asset migration.
01 Crazy Gold and Silver: A Short Squeeze Drama Led by Central Banks
Right now, this wave of precious metals market cannot be analyzed using conventional logic. Gold prices have risen more than 40% this year, and silver is even more exaggerated, once breaking the $50 mark. This is no longer simply driven by safe-haven sentiment, but rather the result of multiple logical resonances.
The core driving force comes from global central banks. In 2025, the Federal Reserve will restart its interest rate cut cycle, cutting rates multiple times throughout the year and announcing monthly purchases of short-term government bonds to inject liquidity. As the appeal of the dollar decreases, the opportunity cost of holding non-interest-bearing assets like gold also declines.
At the same time, the global central bank gold buying spree continues to heat up. In the context of challenges to the U.S. dollar credit system, central banks around the world are accelerating their reduction of U.S. Treasury holdings while increasing their gold reserves. The People's Bank of China has increased its gold holdings for several consecutive months, and the net gold purchases by global central banks account for a considerable proportion of global mined gold production.
The silver market is even crazier. The bid-ask spread for London silver has soared from about 3 cents per ounce to over 20 cents, and market makers are reluctant to quote prices. Even more exaggerated, the silver leasing rate once surged to over 30% in a single month, with overnight rates even exceeding 100%.
What does this mean? Simply put, the shorts have been pushed to the dead end. Those who hold silver sense that prices will rise further and are unwilling to lend it out; those who do not have silver are scrambling to find spot to avoid being unable to deliver. This market is no longer a normal investment market, but a typical short squeeze market.
02 Cryptocurrency Stagnation: A Result of Liquidity Being Intercepted
In stark contrast to the booming precious metals market, the cryptocurrency market has recently shown relatively muted performance. Bitcoin fell into consolidation after breaking historical highs, and altcoins lack overall opportunities. This divergence is a direct reflection of a rebalancing of liquidity.
Funds always flow towards the path of least resistance. Currently, the precious metals market provides a clear main storyline: the Federal Reserve's interest rate cuts, central bank gold purchases, geopolitical risks, and supply-demand imbalances. These factors together constitute a perfect storm.
Meanwhile, the cryptocurrency market faces a narrative vacuum. The ETF benefits that drove the market last year have been fully realized, and new catalysts have yet to appear. More critically, the profit-generating effect in the precious metals market is siphoning off funds that could have flowed into cryptocurrencies.
From the perspective of fund rotation patterns, the cryptocurrency market usually follows the rhythm of 'Bitcoin first, mainstream coins follow, and altcoins party.' However, now this cycle has encountered obstacles right from the first step, as funds have been directly intercepted by the precious metals market.
I have observed an interesting phenomenon: when gold and silver show such strong trends, cryptocurrencies often need to re-accumulate energy. This is not because they have lost investment value, but because liquidity is limited, and the profit-generating effect will guide liquidity flow.
03 The Underlying Logic of Asset Rotation: Subtle Changes in Risk Appetite
Behind this asset rotation is a subtle change in market risk appetite. On the surface, the rise in gold and silver is driven by safe-haven sentiment, but in reality, the current market has surpassed simple safe-haven logic.
The market is now trading on a deeper theme of 'resource sovereignty' reconstruction. Central banks increasing their gold holdings is not because they have suddenly become conservative, but because under the trend of de-globalization, gold provides a credit endorsement that transcends sovereignty.
At the same time, the market is beginning to worry about fiscal sustainability issues. The total U.S. debt has surpassed $37 trillion, equivalent to about 127% of the U.S. GDP in 2024. When major economies face debt pressure, investors begin to seek value storage methods that do not rely on any national credit.
In this context, gold and silver have acquired dual attributes: traditional safe-haven assets + currency credit hedging tools. However, cryptocurrencies, at least at this stage, still struggle to fully assume the latter function.
Ray Dalio's recent viewpoint illustrates the issue well: he suggests allocating at least 10% gold and 4%-5% silver in investment portfolios. This investment mogul is voting with real gold and silver, and his choices represent the direction of some smart money.
04 What will happen next? My personal prediction.
Based on the current market structure, I have a few judgments about the future market:
First of all, the short squeeze in the silver market may not be over. A market that is being short-squeezed never ends with how high it rises; it only ends with a speed of increase that you could not imagine, leading to a bubble burst. Currently, the tight spot in the silver market has not yet eased, which means there may still be upward space for prices.
Secondly, the stagnation in cryptocurrency may be temporary. Historically, asset rotation has cyclical patterns. When the precious metals market has a significant short-term rise, some profit-taking funds may flow back into the cryptocurrency market. The key is to observe whether Bitcoin can hold the critical support level.
Third, it is essential to closely monitor the Federal Reserve's policy shift. If the Fed maintains a dovish stance or even increases easing measures, all inflation-resistant assets may benefit. However, if inflation data exceeds expectations, the Fed may be forced to reconsider its policy stance, which could affect the current market logic.
Personally, I believe that this round of precious metals bull market has entered the mid-to-late stage, volatility will increase, but the trend has not yet ended. Cryptocurrencies need new catalysts to break the current pattern, which may come from technological breakthroughs, clearer regulations, or new institutional entrants.
This asset rotation drama is far from over. As I write this article, I see the latest data: JPMorgan continues to be bullish on gold, expecting it to reach $5055 by the end of 2026. Meanwhile, in the cryptocurrency market, those projects with real users and income are quietly accumulating energy.
The market is like a revolving door; today, funds are reveling in gold and silver, and tomorrow they may cycle back to the cryptocurrency space. The key is not to chase every hot topic, but to understand the logic of fund flows and then position oneself appropriately.
Dear readers, which type of asset do you expect to perform better in the near future? Feel free to share your views in the comments~
Follow me@加密崎哥 #比特币与黄金战争 $BTC
