A perfect storm of global liquidity is unfolding!
Gold and silver are staging the most violent bull market in forty years, while the cryptocurrency market seems unusually calm. Behind this is a dramatic rotation of global capital flows.
When I saw gold break $4500 and silver soar 137% this year, I immediately realized that this is not just an ordinary safe-haven market. The Federal Reserve's interest rate cut cycle has restarted, and central banks around the world are accumulating gold at the fastest pace in half a century. Geopolitical risks are spreading everywhere; these factors together constitute a perfect storm.
The 'stagnation' in the crypto space feels more like the calm before the storm; the laws of fund rotation have never changed, just requiring a bit of patience.
01 The craziness of gold and silver, the collective anxiety of the traditional financial system.
The precious metals market in 2025 can be described as 'crazy.' Spot gold has surged above $4,500/ounce, a cumulative increase of 71% over the year; spot silver has skyrocketed to $69.81/ounce, with an annual increase of 137%.
Such a rise makes all other major asset classes pale in comparison, even surpassing the performance during the 1979 gold bull market.
This frenzy in precious metals is not accidental, but rather the result of multiple logics intertwining and resonating. The shift in the Federal Reserve's monetary policy is the first ignition point. In 2025, the Federal Reserve will restart the interest rate cut cycle, cutting rates multiple times within the year and announcing monthly purchases of short-term government bonds to inject liquidity.
Interest rate cuts not only lower the opportunity cost of holding non-yielding assets like gold but also reduce the attractiveness of the dollar, providing ample liquidity support for rising precious metal prices.
The global central bank gold purchasing trend serves as the second driving force. Against the backdrop of challenges to the U.S. credit system, the net gold purchases by global central banks reached 634 tons in the first three quarters of 2025, with the People's Bank of China increasing its holdings for 13 consecutive months.
Furthermore, a survey shows that 95% of central banks surveyed expect global central bank gold reserves to increase in the coming year. The buying behavior of central banks not only directly increases the demand for gold but also conveys a strong message to the market: gold's status as a defensive asset and monetary reserve is being reestablished.
Silver's unique performance adds to the excitement of the story. Not only does silver have defensive properties, but it is also a key raw material for industries such as photovoltaics and electric vehicles. With the global demand for clean energy and green transportation growing, silver's industrial demand continues to rise, while supply faces numerous challenges.
This supply-demand contradiction will become increasingly acute in 2025, becoming a unique driving force for a significant rise in silver prices.
02 Fund rotation logic, the patience game of cryptocurrencies.
In the face of the wild surge in traditional precious metals, the cryptocurrency market appears relatively calm. This divergence has left many investors puzzled, but from the perspective of the fund rotation cycle, it is entirely logical.
The crypto market and the precious metals market are not simply alternatives; they play different roles in the global liquidity rebalancing.
Gold is experiencing a crazy surge, driven by multiple sovereign nations actively increasing their gold holdings. This move signifies that the world is gradually moving towards a new era where U.S. Treasury bonds are no longer viewed as the sole 'world reserve asset.'
The two key factors driving this trend are: first, the long-term fiscal deficit and debt expansion in the United States; second, the actions taken by the U.S. years ago to freeze Russian foreign exchange reserves, which fundamentally shook the global trust in U.S. Treasury bonds as a 'neutral' reserve asset.
From the perspective of the fund rotation cycle, the cryptocurrency market has its unique rhythm. Historical data shows that fund rotation follows a predictable cycle: first, major cryptocurrencies like Bitcoin rise, attracting institutions and retail investors; then, as Bitcoin's growth slows, funds begin to overflow into mainstream public chains like Ethereum.
Ultimately, funds will further rotate into sub-projects within the ETH ecosystem, including emerging tracks like DeFi, Layer 2, and AI.
Currently, we may be in a stage where Bitcoin's growth is slowing, and funds have not yet overflowed significantly into other cryptocurrencies. Monitoring shows that when Bitcoin's market cap dominance (BTC.D) declines, it indicates that funds are shifting towards altcoins. This signal needs time to brew.
More importantly, the macro liquidity environment has not yet fully materialized. A true 'crypto bull market' may require waiting for the Federal Reserve to lower interest rates to a sufficiently low level, 'unfreezing' the long-stagnant real estate market and releasing vast potential capital.
03 Historical patterns and future outlook, funds will eventually return.
Looking back at history, the fund rotation in the cryptocurrency market shows a clear cyclical pattern. Each bull market cycle typically begins with a strong rise in Bitcoin, followed by a gradual rotation of funds into mainstream public chains like Ethereum, and finally spreading to small-cap altcoins.
The rotation pattern reflects a gradual change in investor risk appetite.
In the early stages of the cycle, investors placed more emphasis on the security, liquidity, and reputation of Bitcoin as a store of value. As market confidence grew, they began to seek higher returns by allocating funds to riskier altcoins with potentially higher rewards.
This rotation was already observed during the bull market in 2021: BTC rose first, followed by ETH soaring from $1,000 to $4,800, driving the DeFi TVL from $20 billion to $250 billion.
For the current market, it is crucial to monitor two key indicators:
Bitcoin market cap dominance (BTC.D): This is a key indicator of the percentage of Bitcoin in the total cryptocurrency market capitalization. When BTC.D falls from a high level, it usually indicates that funds are beginning to rotate into altcoins.
ETH/BTC exchange rate: When Ethereum strengthens against Bitcoin, it often signals that the altcoin season is about to arrive.
Based on the current market conditions, I believe that the rotation of funds from the precious metals market to cryptocurrencies is just a matter of time. As the Federal Reserve's interest rate cut cycle deepens, liquidity will gradually be released, and the cryptocurrency market is expected to welcome a new bull market in the second quarter of 2026.
04 Personal views and suggestions on how to grasp this round of asset rotation.
In the face of the current complex market environment, I recommend adopting a strategy of 'dual layout, patiently waiting.'
In the precious metals sector, silver may still have significant upside potential. Compared to gold, the supply-demand structural contradictions of silver are unlikely to change in 2026, especially under the expectation of re-inflation in the U.S. economy, making it more likely for silver to outperform gold.
However, investors must also guard against rapid adjustments triggered by market overheating while facing rapidly rising prices.
In the cryptocurrency field, focus on Ethereum and its ecosystem projects. Benefiting from the Pectra upgrade and strong inflows into ETH ETFs, market funds are shifting from BTC to the ETH ecosystem. Based on the logic of the rotation cycle, the overflow of funds into Ethereum is most likely to benefit the DeFi sector first.
Specifically, the following directions can be focused on:
RWA (Real World Assets): Tokenized U.S. Treasury bond projects like ONDO bridge traditional finance and DeFi.
DeFi underlying protocols: Lending and trading protocols like UNI and AAVE will directly benefit as on-chain activity increases.
Layer 2 solutions: As the activity level of the Ethereum ecosystem increases, second-layer expansion solutions will experience explosive growth.
The most critical thing is to maintain a certain proportion of cash reserves to seize opportunities during extreme market fluctuations. Remember, be greedy when the market is fearful, and be fearful when the market is greedy.
As the independence issue of the Federal Reserve becomes a new focus for the market, and as the process of global de-dollarization accelerates, we are witnessing a historic transformation of the currency system. The surge in gold and silver is only a superficial symptom of this transformation, while the temporary silence of cryptocurrencies is precisely the buildup period for the next explosion.
The next six quarters, possibly starting in the second quarter of 2026, will see unprecedented growth in the crypto market as the Federal Reserve's interest rate cuts release liquidity.
Now is not the time to hesitate, but rather a moment to patiently lay out plans and wait for rotation. Don't forget to click follow@崎哥说币 #比特币与黄金战争 $BTC .
