All right, everyone. One of the things I’ve been thinking a lot about is this.
Why is Bitcoin not going up when all of the precious metals are going up?
It feels like those two assets were very tied together. There was a lot of correlation between them. And the fact that Bitcoin is not going up has had me thinking a lot about what’s going on with Bitcoin. What are the market forces. What are all the macro factors that are playing into this.
So I spent the weekend taking a deep dive trying to better understand it, and I want to explain what I learned and what my current thoughts are.
First, let’s look at the metals themselves.
Gold is up about 80% in the last year. Silver is up about 250%. Copper is up about 40%. Platinum is up nearly 200% over the last 12 months.
At the same exact time, Bitcoin is down about 16% over the last year.
So not only are the metals up, they are up significantly, every single one of them, but Bitcoin is down. It’s down double digits. And that obviously does not make people feel great. So we have to understand what is driving the price appreciation in the metals before we can think about Bitcoin.
What is driving gold
With gold, I think it’s a safe haven asset. And we know central banks are buying more and more gold for their reserves.
That makes sense because it’s not just that people are dropping dollars and US treasuries. What we’re seeing is a defiatization of the global economy.
That means people are not saying, “I’m going to sell dollars and buy yen or euros or pesos.” Instead, they’re saying, “I’m going to sell dollars and I’m going to buy gold.”
Gold is not completely finite, but it is scarce. And if you have a significant increase in demand for a scarce asset, gold is going to go up.
Silver is different
What’s interesting is it’s not just gold.
Silver, a lot of people say it’s the little brother of gold. Some demand is store of value, sure. Some people buy it because they think it’s scarce and it will appreciate.
But I think the bigger story for silver is that it’s an industrial metal.
You need silver to do a lot of different things. If you start looking at what is going on with silver, you start to think about how many different pieces of defense equipment or AI hardware or even self-driving cars are being built.
There is significant demand for silver because the world is building things again. We are starting to produce stuff again. In the United States and internationally. People are saying they want to reindustrialize the world. If we are going to do that, we need raw materials to conduct that work. Silver is a big winner there.
So yes, some demand is store of value. Some is utility. But that industrial demand is a huge driver.
Copper and platinum are mostly industrial and supply
Then you look at copper and platinum.
Copper is really interesting because you have electric vehicles, electrical infrastructure, renewable energy. All of that needs copper. There is significant industrial demand for copper. I don’t think people are buying copper because they think it’s a store of value. I think it’s industrial demand.
Platinum is similar, but the reason it’s up so much is very low supply. You’ve got a market structure that’s in favor of platinum holders. Then you’ve got increasing demand on top of it.
And notice something. This starts to sound like what used to be the driving story behind Bitcoin.
Finite supply. Huge demand. Big price appreciation.
When you look at gold, silver, copper, platinum, these are all being driven by different inputs. Demand is increasing. Supply is low in some cases. In other cases, demand is overwhelming supply. That pushes price higher.
The rotation through metals
The other thing I find interesting is there has been a rotation.
Will Clemente pointed out this idea that gold kind of ran first. Then people pushed into silver. Now copper and platinum.
So you get this rotation through the metals. I like to call it the metals mania because it doesn’t seem like it’s stopping anytime soon.
We are not going to stop building EVs. We are not going to stop putting in electrical infrastructure. We are not going to stop with renewables. We are going to continue to build all this stuff.
So industrial demand for silver, copper, platinum continues, and that can lead to higher prices over time.
So why is Bitcoin down at the same time
Now, that brings us to Bitcoin.
Metals are up 40% to 250% over the last year. Bitcoin is down about 16% at the same time.
I think there are a couple pieces worth paying attention to.
First is adoption by Wall Street.
Jordi Visser has talked about this “IPO moment” for Bitcoin. You have people who held Bitcoin for 10+ years, and they started to sell or hand it off to Wall Street folks.
A big reason some of those people held Bitcoin was because it was outside the system. It was antithetical to what Wall Street stood for. It was this idea of resisting the system.
Now that it’s being brought into the system, those people may not be as excited. They may think there’s not as much upside. People have said publicly that Bitcoin’s future prospects may not be as asymmetric as the past.
I don’t think that’s a crazy idea. The question is how much will it continue to appreciate.
And I think a lot of the OGs are saying, “I’m not as excited about the future as I was 10 years ago.” That handoff to Wall Street is one driver.
Second, Wall Street adoption changes market structure.
There are now all kinds of financial instruments. It used to be hard to short Bitcoin. Now you can do it very simply.
Options, shorting, selling volatility, all of it changes how price behaves. It’s not all net negative because you can also use these instruments to amplify exposure. But it does change the market structure and how people think about Bitcoin’s price action.
It tempers volatility. Bitcoin used to be an 80 vol asset. Now it’s more like a 40 vol asset.
That affects upside and downside. You shouldn’t expect Bitcoin to be as parabolic, and you also shouldn’t expect the massive 80% to 90% drawdowns from the past either.
So that is one component. The market structure changed.
The chaos hedge bid is weaker
Next, a lot of people looked at Bitcoin as a chaos hedge.
The more instability domestically and internationally, the more Bitcoin looked like an insurance policy.
Wars breaking out, Russia and Ukraine, Israel and Hamas, constant threats from Iran and China. Instability made people want insurance. Bitcoin was the chosen asset for that.
Now central banks choose gold. And central banks have a lot of money. They are driving gold.
But it feels like there’s less of a bid for Bitcoin as the insurance hedge. I don’t think Bitcoin stopped serving that role. I think more people see stability rather than instability.
They look around and say wars are winding down or being ended. They see threats being checked. They see a different posture globally. More stability means less need for the insurance policy.
I don’t know how much this affects actual flows, but I do think it’s part of the narrative.
Inflation hedge has cooled off
Another piece is Bitcoin as an inflation hedge.
Back in 2020, when the government printed trillions, Bitcoiners were yelling about inflation, and big names came out saying they were buying Bitcoin and gold as store of value assets.
Now, whatever the government reports, people argue about it, fine. But the point is inflation is coming down.
There’s been a cratering of inflation in the economy. A big reason is deflationary forces like artificial intelligence. Also deregulation, tax cuts, policies. And tariffs are deflationary. I’ve been saying that for a year.
When you have deflationary forces like AI and tariffs, you get less urgency around inflation hedges. If people don’t believe inflation is going to be 4% or 5% or 6%, they may not need the hedge as much.
Gold is going up, but I think that’s central banks buying it, not necessarily because everyone thinks inflation is about to surge.
If Bitcoin’s main hat was “inflation hedge,” and that narrative drove it from under $10,000 to over $100,000, then a disinflationary or deflationary period can deter some capital flows into Bitcoin.
And I think you’re seeing that in price performance.
AI is the shiny new thing
Last thing is artificial intelligence is the shiny new tool.
Look at young people. How many are talking about Bitcoin versus talking about Claude Code, Claudebot, Claude Co-work, ChatGPT, Perplexity, and all these tools.
A huge piece of capital flows is simply, how do I make money.
Right now a lot of people are not looking at Bitcoin as the place to make money quickly. Sentiment is bad. They’re not saying, “I’m going to make a ton of money with Bitcoin.” They’re looking at AI.
They’re saying, if I buy Nvidia, if I buy Meta, these stocks are going up fast. That’s where I can make money.
And they’re also thinking about their own time and energy. Rather than build a Bitcoin company, maybe they build an AI company. Maybe they can make money, build enterprise value, eventually sell it.
Zoom out and you have metals up huge, Bitcoin down, and part of the explanation is people see more stability, less inflation risk, and AI is the shiny new thing.
Everything competes for risk capital
And there’s also more competition.
Prediction markets are here. Sports betting is massive. There are simply more places for capital to go.
There’s an attention economy idea that applies to markets too. When someone opens their phone and says, “What am I going to do,” everything is competing with everything else.
Same with money. Someone opens an exchange and says, “I got paid. I have some money left over. Where do I put it.” Every asset competes.
If you want asymmetry, it’s not just Bitcoin as the only game. It’s Bitcoin, AI, and many other things. Prediction markets. Sports gambling.
And I actually think a lot of young people do think about it that way. They’re trying to drive a return. They don’t always see a clean line between investing and gambling. They see risk-taking. They’re wagering capital. They’re trying to get a return.
It’s kind of weird. Do we want society addicted to gambling. Do we want people betting on nonsense. But whether you like it or not, people vote with dollars.
The good news and the patience part
The good news is assets that lag usually catch up at some point.
I don’t think the long-run Bitcoin narrative has changed. If anything, Bitcoin may be more interesting at $87,000 than it was at $126,000.
If you loved it at 125K, you should love it at 87.
But that’s not how humans think. When an asset is going up, they want to buy it. When it’s going down, they say it’s not working.
Big money is not made in the buying and selling. It’s made in the waiting.
Bitcoiners are realizing that if you dollar cost average into a great asset and hold it for a long time, it usually turns out fine.
Ask the gold bugs. They sat on gold for a decade, people mocked them, and then it worked. They had a thesis. They waited. They were right.
Bitcoiners may be in that same position. If you have patience, you’ll be fine. If you need Bitcoin to go up 100% every year, you will get disappointed and shaken out.
And when Bitcoin finally does what it was created to do, you might not be at the party.
That’s it.
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