Precious metals are rallying again, with silver stealing the spotlight while gold regains its shine, and investors are starting to wonder if cryptocurrencies could be next.
Key points to remember:
- Silver has doubled this year on bets on rate cuts, a weak dollar and rising industrial demand.
- Bitcoin is down more than 30% from its peak as crypto markets suffer their biggest decline since 2022.
- ETF outflows and on-chain losses show stress in crypto, even as metals attract new investor interest.
Gold climbed to its highest level in six weeks on Monday as investors increased their bets on a fall in U.S. interest rates, pushing spot prices above $4,240 an ounce.
Silver surged even harder, reaching a record near $57.86 before faltering slightly, and is now up more than 100% this year.
Bets on falling rates and dollar weakness fuel silver’s record high
The move comes as markets reassess their expectations for looser monetary policy. Recent weak U.S. data and dovish remarks from policymakers have fueled anticipation that the Federal Reserve could cut rates as early as this month.
Futures markets now imply a high probability of decline, and the dollar has fallen to a two-week low, making the metals cheaper for foreign buyers.
Analysts also point to stronger industrial demand as a positive factor for silver, alongside its traditional role as a hedge when confidence in paper assets fades.
As metals soar, crypto is grappling with a very different vibe.
Bitcoin has lost more than 30% from its October peak near $126,000 and is now trading around $86,000, Linh Tran, market analyst at XS.com, said in a commentary.
November alone saw a double-digit decline, capping the worst year-end performance since the 2022 bear market.
Over the past six weeks, the broader crypto market has lost around $1 trillion in value, with Bitcoin accounting for more than $400 billion of that decline.
Institutional flows tell a similar story. U.S. spot Bitcoin ETFs saw net outflows of around $3.5 billion in November, the largest monthly withdrawal since approvals early last year.
Investors have used these vehicles as a quick exit as macroeconomic risk rises, reversing the trend that once surged higher during the rally.
Signs of strain are also appearing on-chain, where realized losses among short-term holders have reached levels last seen in late 2022, a signal of capitulation by late entrants and leveraged traders.
Bitcoin ETF Outflows Ease As Institutional Base Remains Firm
Still, some evidence suggests the bleeding may be slowing, Tran said. In late November, ETFs saw a modest return to net inflows, adding about $70 million.
Although small compared to previous outflows, this change suggests that selling pressure may be drying up.
In total, ETFs still hold nearly $120 billion in Bitcoin, or about 6.5% of the network’s market value, indicating that the long-term institutional footprint remains intact.
So, does the silver breakout portend a crypto rebound? Historically, easier money drives all risk assets higher, but timing matters.
Metals often move first when rate expectations change. Digital assets tend to follow once liquidity actually turns.
For now, Bitcoin appears stuck in a volatile range between $80,000 and $90,000, with the risk of a deeper test towards $70,000 if macroeconomic conditions deteriorate again.
“In the medium to long term, if the Fed begins to signal clearer monetary easing, macroeconomic risks subside, and ETF flows move from net outflows to neutral or net inflows, Bitcoin will have the runway to establish a new upcycle,” Tran said.
Silver Hits New Highs, Up 100% YoY: Is a Cryptocurrency Breakout Coming Too? appeared first on Cryptonews.
