Bitcoin The sharp rejection of $90,000 on Wednesday was a quick reminder to investors that precious metals like gold and silver are the real winners of the downgrade trade, not (at least for the moment) digital gold.
In October, JPMorgan analysts said gold and bitcoin were benefiting and would continue to benefit from the so-called debasement trade. They projected that BTC would follow gold’s lead, setting a BTC price target of $165,000 on a volatility-adjusted basis relative to gold.
Until now, that thesis has not been carried out.
While BTC languishes around $88,000, down 30% from its early October record, gold is trading near all-time highs around $4,350 an ounce and silver hit new all-time highs above $66 on Wednesday, up 40% since October.
“Bitcoiners cannot ignore the precious metals bull market, which continues to roar,” said Charlie Morris, founder of ByteTree.
Why is BTC lagging behind?
Bitcoin’s current weakness is due to its link to risk assets, Morris wrote in a Wednesday report. While stock indices have been hovering around record highs, the most speculative sectors of the stock market – data centers, AI infrastructure bets and recent IPO names – have seen sharp declines in recent weeks.
There is also a technical element behind bitcoin’s relative weakness against gold. The BTC-gold ratio has already peaked in late 2024 and is deep in a bear market dropping more than 50%.
In August, BTC gold hit a lower high, signaling fading momentum, and has since retreated, hitting a new low on Wednesday and its weakest level in nearly two years.
Structural selling by long-term holders has also contributed to bitcoin’s weakness. Research by Vetle Lunde, head of research at K33, noted that the supply of BTC held in UTXO (results of unspent transactions) of more than two years has persistently decreased, with approximately 1.6 million BTC reactivated since 2024. Furthermore, Glassnode data also shows that long-term investors have increased the selling of their holdings.
“This represents on-chain evidence of substantial and sustained selling pressure from long-term holders,” Lunde said.
There is also growing discussion about the risks that quantum computing poses to Bitcoin’s cryptographic security. While the concern remains largely theoretical, it has added a layer of uncertainty for investors.
Analyst: Silver Rally Could Set the Stage for BTC
The silver lining (no pun intended) for bitcoin investors is that BTC should eventually take over from gold as the yellow metal’s rally cools.
Historical patterns show that gold peaks often precede BTC rallies by 100 to 150 trading days, Bitfinex analysts noted. They said the current consolidation of the bitcoin market is a transitional phase, laying the groundwork for a recovery in 2026.
Bytetree’s Morris expressed a similar opinion.
“I’m still bullish on silver, but it won’t be that way forever,” Morris said. “I suspect that when the rally loses steam, bitcoin will intervene.”
