Gold and silver prices are falling, which is negatively affecting bitcoin as well.
By Shaurya Malwa|Edited by Aoyon Ashraf Jun 27, 2026, 6:11 p.m. 3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShow- The ongoing reversal of the so-called debasement trade is impacting gold, silver, and bitcoin simultaneously, as investors shy away from scarce assets previously viewed as shields against currency depreciation.
- A newly assertive Federal Reserve under Chair Kevin Warsh and a robust dollar are driving real yields higher, diminishing the appeal of non-yielding assets such as gold, silver, and bitcoin, making them pricier for international investors.
- Despite bitcoin's recent relative outperformance against gold and silver, it has experienced a nearly 50% drop from its peak, highlighting its dual nature as both a speculative investment and a hedge against inflation.
The current surge in artificial intelligence stocks has diverted investment away from traditional metals, which are generally seen as safe havens, toward cryptocurrencies recognized as riskier.
This week, gold fell below $4,000 for the first time since November, silver has plummeted more than 50% from its peak, and bitcoin has decreased to almost $58,000.
The decline in these three assets is interconnected. Over the last two years, they have largely been influenced by the same dynamics, which are now unraveling.
This strategy is referred to as the "debasement" trade, which posits that significant government spending and escalating national debt will gradually diminish the value of fiat currency, prompting investors to gravitate towards limited assets that cannot be easily produced by any government.
Gold and silver represent the traditional forms of this investment, while bitcoin, which has a maximum supply of 21 million coins, was marketed as the digital equivalent. Throughout 2025, as the dollar appeared vulnerable, there was a surge of investments in all three, treating them as a single category.
The factors that contributed to their rise are similarly driving their decline. At his initial meeting, the new Federal Reserve chair, Kevin Warsh, adopted a hawkish stance, leading markets to anticipate two quarter-point interest rate increases by March 2027, potentially raising the Fed's benchmark rate to between 4.00% and 4.25%. This week, the U.S. dollar appreciated by 0.8%.
Both developments negatively affect hard assets. Increased interest rates elevate real yields, which are the returns on secure assets like Treasuries adjusted for inflation, thereby raising the cost of holding gold, silver, or bitcoin, none of which generate any yield.
A stronger dollar increases the cost of these assets for buyers using other currencies. Consequently, a drop in gold and silver prices often indicates a shift in the macroeconomic environment that is unfavorable to this investment narrative.
Bitcoin's role in this context has always been somewhat ambiguous. For the majority of 2025, while gold and silver were experiencing significant gains, bitcoin remained stagnant around $100,000. This divergence raised questions about whether bitcoin still belonged in the debasement trade or if its function as a hedge against currency devaluation had diminished.
Currently, it is noteworthy that while bitcoin trailed behind the metals during their ascent, it is now closely following their descent.
The extent of this reversal is considerable. Gold has dropped roughly 28% from its January 2025 peak of nearly $5,600, silver has fallen more than 50% from its high of around $120, and bitcoin has decreased by about 50% from its October peak. This decline has pushed bitcoin below its 200-week moving average, which is a vital long-term benchmark at approximately $60,000.
Nonetheless, there is a silver lining for bitcoin investors, albeit with a caveat.
Since these ratios hit their lowest in February, bitcoin has outperformed both metals, rising about 30% against gold and over 55% against silver.
Bitcoin is currently viewed as both a speculative asset and a hedge against inflation, and presently both perspectives align. The unwinding of the debasement trade, which previously supported its rise alongside gold and silver, is now contributing to its decline in tandem with them. As long as the Federal Reserve maintains a hawkish stance and the dollar remains strong, bitcoin is likely to continue to struggle to separate itself from the metals it has been compared to for years.
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