Gold and Silver Surge While Bitcoin Struggles: Understanding the Flow of Capital into Precious Metals

As Bitcoin attempts to regain the $90,000 mark, market confidence is waning, leading analysts to predict a possible extended bear market. In contrast, gold and silver are experiencing a rally, driven by demand for safe-haven assets amid geopolitical uncertainties and low real interest rates. This article analyzes why capital is flowing into precious metals while Bitcoin struggles to attract new investment.

Key Takeaways

Bitcoin is struggling to break past the $90,000 level, leading to cautious market sentiment.
Investors are favoring gold and silver due to their status as safe havens amid economic uncertainty.
Bitcoin's nature as a high-risk asset limits its appeal compared to precious metals.
Technical indicators suggest Bitcoin is losing bullish momentum and is testing critical support levels.

Gold & Silver Break Out While Bitcoin Chops: Why Capital Is Flowing Into Precious Metals

Bitcoin's Struggles and the Rise of Precious Metals

Bitcoin is finding it challenging to reclaim the $90,000 mark, as market confidence declines and analysts forecast a potentially prolonged bear market. Sentiment has turned notably cautious, causing investors to reassess their risk exposure and prepare for a potentially tough economic period. Despite several attempts to stabilize, the price movement has been limited, providing little indication that bullish momentum is close to returning.

According to XWIN Research Japan, the market is currently experiencing a phase of range-bound consolidation after a significant correction, with momentum leaning towards the downside. While Bitcoin has mostly remained stagnant over the last three months, traditional safe-haven assets like gold and silver have charted a different course.

Gold and silver prices have steadily increased, reflecting a growing demand for defensive assets amid ongoing geopolitical tensions, uncertainty in policy, and expectations for lower real interest rates. This stark contrast creates a structural challenge for Bitcoin within the present macroeconomic environment. Institutional investors can easily allocate to precious metals thanks to deep liquidity, established market frameworks, and clear regulatory guidelines. Particularly, silver has amplified gold’s upward movement, supported by tighter supply dynamics and a heightened sensitivity to speculative flows.

Bitcoin's Risky Nature Limits Its Potential Upside

The analysis indicates that Bitcoin has not experienced the same upward movement as gold and silver because it is largely viewed as a high-risk asset rather than a true safe haven. In risk-off scenarios, capital tends to flow primarily into gold and government bonds as investors seek stability and protection for their capital. Bitcoin, on the other hand, often gets attention only after investor confidence improves.

Unlike gold, which benefits from a long-term, relatively price-insensitive buyer base, Bitcoin is more vulnerable to short-term shifts in demand and positioning. This means that general macroeconomic tailwinds alone may not be enough to support a sustainable upward trend for the leading cryptocurrency.

Supporting this perspective, CryptoQuant data shows that recent apparent demand for Bitcoin has turned negative, indicating a lack of new demand even as prices remain relatively high.

Bitcoin apparent demand | Source: CryptoQuant

Additionally, the Short-Term Holder SOPR (Spent Output Profit Ratio) has been below 1 for an extended period, suggesting that short-term holders are selling at a loss or breaking even. This behavior tends to exert additional selling pressure during rebounds, as these holders might look to exit their positions when prices rise.

As capital continues to favor gold and silver, Bitcoin's internal demand structure presents a significant limitation. The prevailing outlook indicates continued support for precious metals, while Bitcoin’s potential for growth remains restricted by weak demand and pressures from short-term holders. This perspective might change if apparent demand for Bitcoin turns sustainably positive, and if the Short-Term Holder SOPR rises above and maintains above 1.

Prices Testing Key Support As Trends Weaken

Currently, Bitcoin is trading around the $87,000–$88,000 range following a sharp correction from recent highs above $110,000. The price charts reveal that Bitcoin has lost its short-term bullish structure, now sitting firmly below the 50-day moving average (shown in blue), which is starting to trend downwards. This indicates that short-term momentum has turned negative and rallies are facing increasing selling pressure.

BTC testing structural support | Source: BTCUSDT chart on TradingView

More critically, Bitcoin is currently testing the 100-day moving average (in green), which has served as dynamic support throughout much of its recent cycle. The market's response around this level is vital. A sustained hold above the 100-day moving average could allow Bitcoin to stabilize and establish a base. Conversely, a clear breakdown could lead the price towards the 200-day moving average (in red), which is currently trending near the low $80,000s.

The volume dynamics further emphasize a cautious outlook. The sell-off that followed the October peak was accompanied by high trading volume, indicating a distribution rather than a minor pullback. Since that time, trading volume has reduced, pointing to a lack of strong interest in buying dips at the current price levels.

Structurally, Bitcoin remains in a wider uptrend as long as it maintains above the 200-day moving average. However, the recent loss of the 50-day average and waning momentum suggest potential consolidation or further downside risks in the near future. For bulls to regain control and significantly change sentiment, a recovery back above the $90,000 mark is essential.

Featured image from ChatGPT, chart from TradingView.com