Global capital is quietly shifting, with the frenzy in the gold and silver markets starkly contrasting the quietness in the crypto space. This is not only a shift in market sentiment but also an instinctive reaction of capital seeking a safety cushion in uncertain environments.
As an analyst who has been navigating the cryptocurrency market for many years, I have recently observed an interesting phenomenon: when gold and silver continuously hit record highs, even requiring a month-long wait to buy silver bars, Bitcoin, once referred to as 'digital gold,' appears unusually calm.
This divergence has led many of my friends in the industry to start questioning life. Wasn't Bitcoin supposed to be the safe-haven asset of the new era? Why, when times of turmoil arrive, does capital still flee back to the embrace of traditional precious metals?
Today, I will discuss my true views from the perspective of liquidity and asset rotation.
01 Market Differentiation: Gold and Silver Soar, Crypto Market Stagnates
First, let's look at a set of data. Gold prices have surged 44% this year, reaching a historical record of $3,784 per ounce; silver performed even stronger, with an increase of over 70%, breaking through $50 per ounce for the first time. Platinum rose by 60%, and even palladium, which performed relatively moderately, achieved a 33% increase.
Meanwhile, Bitcoin's price increase this year has only exceeded 20%, hovering around $113,000. In terms of price increase, Bitcoin has clearly underperformed almost all major precious metals.
More attention should be paid to the market's micro performance. My on-site research in the Shui Bei market shows that buying silver bars now takes at least a month, and some platforms have sold out of all specifications of investment silver bars. This frenzy is reminiscent of the madness in the cryptocurrency market in 2021, but this time the main characters are physical gold and silver.
The flow of funds is clear: traditional precious metals are becoming the preferred choice for risk-averse capital, while cryptocurrencies like Bitcoin are temporarily neglected.
02 The Logic Behind: Why Precious Metals?
On the surface, the surge in precious metals is driven by risk aversion. However, upon deeper analysis, I believe there are three key factors that the market has overlooked.
Central banks around the world continue to make large-scale purchases of gold. Since the outbreak of the Russia-Ukraine war in 2022, the annual gold purchases by global central banks have jumped from about 467 tons to about 1,000 tons, which is roughly twice the estimated purchasing volume of gold ETPs. This purchasing power is unmatched by individual investors.
The deteriorating fiscal situation in developed countries has increased demand for safe-haven assets. The scale of US federal government debt has surpassed $38 trillion, with debt-to-GDP ratio exceeding 130%, reaching a new high since World War II. When sovereign credit risks rise, gold, as an asset with 'no credit risk,' naturally attracts attention.
Precious metals like silver have dual attributes. Silver is not only a precious metal but also an important industrial raw material, with applications in photovoltaic and new energy sectors accounting for over 60%. The global green transition has driven silver demand, and the global silver supply-demand gap is expected to reach 120 million ounces in 2024, a near five-year high.
Bitcoin currently cannot enjoy these dividends. Central banks will not buy Bitcoin, and its industrial application scenarios are limited; it is more of a speculative and value storage tool. In the current environment, precious metals clearly align more with the needs of capital.
03 Why Bitcoin is Stagnant: My Three Judgments
In the face of the frenzy surrounding precious metals, Bitcoin appears particularly calm. I believe this is not a bad thing but a sign of market maturity. From my perspective, there are three layers of reasons behind Bitcoin's stagnation:
Profit-taking pressure. Since the launch of the Bitcoin ETF in January 2024, ETFs and companies have cumulatively purchased 1.39 million Bitcoins, far exceeding the new supply during the same period. However, at the same time, price-sensitive holders have seized the opportunity to sell, suppressing upward momentum.
The suppression of a high-interest rate environment. Although the market expects rates to peak soon, as long as the high-interest rate environment persists, the cost of capital for high-risk assets remains high. Currently, funds are more inclined to flow towards the more certain gold rather than the highly volatile Bitcoin.
Regulatory uncertainty still exists. Although the US has approved a Bitcoin spot ETF, the global regulatory framework remains unclear. For large funds, this uncertainty is enough to make them wait and see for now.
But I must emphasize that this does not mean Bitcoin's 'digital gold' narrative has failed. Matt Hougan, Chief Investment Officer of Bitwise, analyzes that Bitcoin's current situation is similar to gold's phase from 2022 to 2024: despite a large amount of buying, the price needs time to explode.
04 Asset Rotation: The Underlying Currents of Liquidity
The essence of asset rotation is the redistribution of liquidity among different assets. Currently, we are at the end of the fifth Kondratiev wave (led by information technology) and standing on the brink of the sixth Kondratiev wave (led by AI and new energy).
At this juncture of cycle switching, liquidity will be transmitted along specific paths.
2024-2025 is the first phase, where commodities and cyclical stocks will have opportunities. The restructuring of global supply chains, coupled with various countries' equipment renewal policies, will drive a recovery in capital expenditure for bulk commodities. This explains why precious metals like gold and silver are performing so prominently.
By 2026-2027, funds may shift towards small-cap technology stocks. The technological revolution will enhance total factor productivity, and at that time, crypto assets may encounter new opportunities.
I believe that the current flow of funds towards precious metals is a short-term risk aversion behavior rather than a long-term trend. Once the macro environment improves and risk appetite rebounds, funds will flow back into high-risk, high-return assets, including cryptocurrencies.
05 Future Outlook: My Personal View
As an analyst deeply involved in the crypto field for a long time, I maintain a rationally optimistic view of the market. The following points are my personal judgments:
Bitcoin and gold are not substitutes but complementary. Gold has a millennia of consensus, while Bitcoin has technological advantages, and both can serve different asset allocation needs. Wise investors will allocate both instead of choosing one over the other.
Bitcoin's 'golden moment' may just be delayed, not disappearing. Referencing gold's trajectory: central banks have been buying gold since 2022, but gold prices did not explode until 2025. As long as Bitcoin ETFs and corporate joint buying continue, Bitcoin is likely to welcome a similar explosive moment.
Stablecoins may explode earlier than Bitcoin. The supply of stablecoins is growing rapidly, with the third hundred billion scale expected to be achieved within 12 months. As major banks issue their own stablecoins, stablecoins may become the 'killer application' in the crypto field.
I am optimistic about the second half of 2025. Once the expectations for Federal Reserve rate cuts are clear, the improvement in global liquidity will benefit the crypto market. However, in the short term, investors need to be patient and not expect Bitcoin to replicate the surge of precious metals.
Future asset rotation may exhibit characteristics of 'weak commodities, strong technology, and quick switching.' When the Federal Reserve's rate cuts catalyze a global asset allocation rebalancing, Bitcoin is likely to experience its own 'golden moment.'
The current market differentiation is a normal phenomenon of asset rotation, and there is no need for excessive interpretation. Staying calm and patient is the attitude that we crypto veterans should have.
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