From 80% to -16%: Why Bitcoin is lagging behind precious metals

Recently, precious metal prices hit new highs, while Bitcoin has been oscillating within the $84,000-$94,000 range. Over the past year, gold has risen by 80%, silver surged by 250%, yet Bitcoin has actually declined by 16%. Pompliano’s recent analysis points out that this is not simply a price issue, but a deep structural change in market dynamics, demand differentiation, and capital competition patterns.

Market Divergence Behind the Numbers

Pompliano describes this as a typical “precious metals rotation” phenomenon, where each metal has clear demand sources. Gold benefits from ongoing central bank reserves accumulation and global economic restructuring; silver and copper are favored due to industrial and electrification needs; platinum is supported by supply constraints. The upward trends in these assets are backed by clear fundamentals.

Why Is Bitcoin Falling Behind?

Fundamental Changes in Market Structure

Bitcoin is experiencing an “IPO moment.” Long-term holders are gradually transferring Bitcoin to institutional investors, changing the holder and trading ecosystem. Meanwhile, the tools and channels for shorting Bitcoin have increased significantly, leading to a noticeable decrease in market volatility. Data shows Bitcoin’s volatility has dropped from 80 to 40, meaning the chances of extreme rises and falls have diminished, resulting in a more moderate asset performance.

Shift in Demand Narrative

Pompliano points out that Bitcoin was once seen as a “chaos hedge,” but with current global geopolitical stability, investors’ perception of this insurance demand has significantly declined. More critically, central banks worldwide have increased gold holdings to express hedging preferences, weakening Bitcoin’s appeal as a hedge asset.

Inflation expectations are also waning. Trueflation data shows inflation has fallen from 2.7% ninety days ago to 1.2%, directly reducing investors’ interest in Bitcoin as an inflation hedge.

Attention and Capital Are Dispersing

Bitcoin is no longer the default choice for risk capital. Emerging investment opportunities like AI stocks, prediction markets, and sports betting are attracting the attention of young investors. This means incremental funds entering the crypto market are being diverted, and Bitcoin’s relative attractiveness is declining.

What Does Bitcoin Look Like Now?

According to the latest data, Bitcoin’s current price is $87,726.31, with a market cap of $1.75 trillion, accounting for 59.07% of the entire crypto market. But compared to the performance of precious metals, it indeed appears calm.

Pompliano believes Bitcoin is transforming into a lower-volatility asset, turning trading into a “waiting game.” This requires holders to have patience and a long-term perspective, rather than chasing short-term gains. Nevertheless, he remains optimistic about Bitcoin’s future potential, considering the current price more attractive than the previous $126,000.

Summary

Bitcoin’s underperformance relative to precious metals reflects deep structural market changes rather than a single factor. Precious metals are supported by clear industrial, political, and economic demand, while Bitcoin faces multiple pressures: demand narrative shifts, declining volatility, and increased capital competition. This does not necessarily mean a bleak outlook for Bitcoin; rather, the market is giving it a new positioning: transitioning from a highly volatile risk asset to a relatively stable institutional asset. For investors, this implies adjusting expectations and holding strategies, shifting from short-term gains to long-term allocation.