The cryptocurrency market is experiencing a notable divergence from the precious metals sector, with gold and silver prices surging to new all-time highs while digital assets face downward pressure. Over the past two days, the total crypto market capitalization has declined by over 2%, hovering around $3.09 trillion.
Gold has broken above $4,700 per ounce, marking a new record high after a 1% surge on Tuesday. Silver has seen an even more dramatic rise, climbing nearly 6% in the last 24 hours to trade above $95 per ounce. This bullish momentum in precious metals contrasts sharply with the slump in crypto assets.
Analysts point to rising geopolitical tensions, particularly between the US and NATO members, as a primary driver for the flight to traditional safe-haven assets like gold. Furthermore, there is a noted shift in central bank reserves, with gold increasingly being favored over the US dollar.
Cryptocurrency analyst Michael van de Poppe highlighted this inverse correlation, noting that gold's rally has continued from the final quarter of last year—a period when Bitcoin entered a bearish phase. He also identified rising bond yields, specifically the Japanese 40-year government bond yield reaching a record high, as a potential trigger for increased volatility in Bitcoin's price. The fallout from recent economic forums like Davos and policy shifts from Japan's central bank could further contribute to market instability.
The analysis suggests that the current environment is setting the stage for a potential capital rotation, where gold's outperformance may precede or influence a shift in investor sentiment back towards crypto assets like Bitcoin.
