Bitcoin The sharp rejection at $90,000 on Wednesday was a quick reminder to investors that precious metals like gold and silver are the real winners in the depreciation trade, and not – at least for now – digital gold.
Last October, JPMorgan analysts said that gold and bitcoin both benefited and would continue to benefit from so-called depreciation trading. They predicted 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, this thesis has not been accepted.
While BTC languishes around $88,000, down 30% from its record high in early October, gold is trading near its 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 bull market in precious metals, which continues to roar,” said Charlie Morris, founder of ByteTree.
Why is BTC lagging?
Bitcoin’s current weakness stems from its connection to risky assets, Morris wrote in a report published Wednesday. As stock indexes have edged closer to their all-time highs, the most speculative pockets of the stock market — bets on data centers and artificial intelligence infrastructure and recent IPOs — have seen sharp declines in recent weeks.
There is also a technical element behind Bitcoin’s relative weakness compared to gold. The BTC-gold ratio has already peaked in late 2024 and is in the midst of a bear market that is falling more than 50%.
In August, BTC-gold hit a low, indicating slowing momentum, and it has since reversed, hitting a new low on Wednesday and its weakest level in almost two years.
Structural selling by long-term holders also contributed to bitcoin’s weakness. A study by Vetle Lunde, head of research at K33, noted that the supply of BTC held in UTXOs (unspent transaction exits) older than two years is in persistent decline, with approximately 1.6 million BTC reactivated since 2024. Separately, Glassnode data also shows that long-term investors have accelerated the sale of their holdings.
“This represents on-chain evidence of substantial and sustained selling pressure from long-term holders,” Lunde said.
There is also increasing discussion around the risks that quantum computing poses to the cryptographic security of Bitcoin. While this concern remains largely theoretical, it adds a layer of uncertainty for investors.
Analyst: Silver rally could pave way 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 spikes often precede BTC rallies by 100 to 150 trading days, Bitfinex analysts pointed out. They said the current consolidation of the Bitcoin market is a transitional phase, laying the groundwork for a catch-up in 2026.
Bytetree’s Morris expressed a similar view.
“I remain bullish on the money, but it won’t last forever,” Morris said. “I suspect that when the rally runs out of steam, Bitcoin will step in.”
