Gold and silver both hit record highs – is Bitcoin, the "digital gold," lagging behind?

Author: Mahe, Foresight News

On January 24th, gold and silver continued their significant upward trend, with spot gold hovering around $4,990 per ounce and silver breaking through the $100 mark for the first time, both reaching new all-time highs. In contrast, Bitcoin repeatedly fluctuated around $90,000.

This divergence highlights a structural shift in global markets: in an environment of uncertainty, traditional safe-haven assets are thriving, while Bitcoin is dragged down by liquidity constraints and risk aversion.

The underlying drivers of gold and silver's continued record highs

In January 2025, gold prices were at $2,600, and subsequently surged upwards, reaching nearly 100% as of January 23rd of this year.

Silver, as a "volatile companion to gold," has outperformed it. Starting in April 2025, the price of silver rose from $30, reaching new highs amidst continuous fluctuations, and its increase to date has exceeded 300%. This surge stems from a combination of macroeconomic and geopolitical factors. Central bank gold purchases are a key driver. The People's Bank of China added 27 tons of gold reserves in 2025, and the Reserve Bank of India increased its gold holdings from 10% to 16%, driven by rising prices and diversification into US Treasury bonds. Against the backdrop of US debt exceeding $36 trillion, this de-dollarization trend positions gold as a hedge against currency devaluation. Geopolitical tensions exacerbate demand. US tariff threats on Greenland and intervention in Iran triggered safe-haven inflows, pushing gold above $4,800. A weaker dollar—the Wall Street Journal Dollar Index is projected to fall 6% in 2025—further supports prices, making dollar-denominated metals more attractive to overseas buyers. The collapse of the Federal Reserve's independence and the resulting credit crisis are also severe; the most pressing impetus stems from an "institutional earthquake" in Washington. With the launch of a criminal investigation into Federal Reserve Chairman Jerome Powell, the Fed's independence as the last line of defense for global currencies has been called into unprecedented scrutiny. As investors realize that central banks may become tools of political maneuvering, the long-term credibility of the US dollar is being eroded. Despite gold prices approaching the $5,000 mark, global ETF holdings and central bank reserve purchases continue to see net growth. This indicates a shift in market psychology: the concern is no longer that prices are too high, but rather that fiat currencies are too "cheap." For silver, industrial demand provides additional upward pressure on prices. Since 2021, structural supply shortages have continued to widen, with mine production remaining flat while demand for solar panels, electronics, and AI infrastructure has surged. China's export restrictions, effective January 1, 2026, will exacerbate the silver shortage. Analysts predict an annual shortage of 200-300 million ounces, with industrial consumption accounting for 50% of supply. In the later stages of a precious metals bull market, silver, due to its smaller market size and greater elasticity, often experiences extremely sharp catch-up rallies. The current gold-silver ratio is reverting to its historical average or even lower. Renowned economist Hong Hao previously analyzed that as long as the expectation of improved global liquidity remains unchanged, silver's upward cycle is not over. Although its volatility will far exceed that of gold, its "industrial necessity" attribute, beyond being "digital gold," will provide solid support. This contrasts sharply with Bitcoin's trajectory. After reaching a peak of $126,000 in 2025, it has been consolidating around $90,000. Glassnode stated that Bitcoin has lost its 0.75 supply cost percentile and has failed to recover it. Currently, the spot trading price is below the cost benchmark of 75% of the supply, indicating increasing distribution pressure. The risk level has moved upwards, and unless it can regain that level, the market will be dominated by a downward trend. The main culprit is the tightening liquidity. Since 2022, the Federal Reserve has implemented quantitative easing (QT), withdrawing $1.5 trillion in reserves to curb speculative capital inflows into risky assets such as Bitcoin. The $19 billion leveraged sell-off in October exacerbated this problem, leading to a chain reaction of liquidations. While geopolitical risks have boosted gold, they have triggered risk aversion in the crypto space. From a cyclical perspective, although BTC has not outperformed gold and silver since last year, its absolute return multiple is still quite impressive, with a rise of over 800% from $15,000 to a record high of $126,000. Windemute reported that Bitcoin appears to be entering an upward channel after breaking out of its narrow 50-day trading range. The market landscape changed last week. For the first time since November, Bitcoin broke out of its range based on real money flows (rather than leveraged trading). ETF demand returned, the inflationary environment was favorable, and cryptocurrencies began to catch up with the overall rise in risk assets. Monday's sharp drop, while dramatic, was a healthy correction. Leverage was quickly cleared, and the market did not fall into a vicious cycle, which is a positive sign. The current question is whether the tariff controversy is just a "bluff" or will evolve into substantive policy. The market leans towards the former; year-to-date, US stocks and the dollar have still risen, and interest rates have not been repriced. If Bitcoin can hold above $90,000 this week and ETF inflows continue, the breakout rally is likely to continue; however, if subsequent selling pressure causes it to fall below $90,000, the range established since November will once again become a resistance level.