Why are gold and silver repeatedly hitting new highs while cryptocurrencies continue to decline?

On January 26, 2026, spot gold surged above $5,100 per ounce intraday, rising over $110, or more than 2% within the day. Historically, spot gold broke through the $5,000 mark per ounce, just over 100 days after its first crossing of the $4,000 threshold (October 8, 2025). Market analysis indicates that macro factors such as central banks increasing gold purchases, geopolitical tensions, and economic uncertainties have been driving gold prices higher in recent years. Spot silver also did not lag behind, continuing last week’s rally, intraday breaking above $110 per ounce, just one trading day after surpassing $100 last Friday, with a daily increase of about 6%.
Although precious metals prices are soaring, the crypto market remains pessimistic. BTC is priced at $87,480.58, down 5.5% over 7 days. ETH is priced at $2,863.18, down 10.6% over 7 days.
Why are gold and silver soaring while cryptocurrencies keep falling?
1. What is driving the surge in precious metals prices?
1. Geopolitical Risks
From Europe's geopolitical struggles to military standoffs in the Middle East, multiple hotspots are intensifying global risk aversion, becoming one of the core drivers of gold price increases.
1) Greenland Crisis
On January 25, Trump stated that the U.S. expects to gain “sovereignty” over the area where U.S. military bases are located on Greenland, and claimed negotiations are “progressing smoothly,” saying “we will get everything we want.” It is reported that this does not involve the U.S. taking full control of Greenland, but rather making U.S. military facilities, including Pituffik Space Base, part of U.S. sovereignty. Greenland has explicitly opposed this, stating sovereignty is an “unbridgeable red line.”
Looking further back, on January 21, Trump said his goal to control Greenland “will never change,” and refused to rule out the possibility of seizing Greenland by force. He clarified on social media that his aim was to seize Greenland’s sovereignty from NATO ally Denmark. The day before, Trump refused to specify whether he would use force to take Greenland, calling it “classified.”
On January 18, Trump announced tariffs of 10%-25% on EU goods, pressuring Denmark to sell Greenland, citing national security reasons.
2) Russia-Ukraine Conflict
On January 23-24, Russia, Ukraine, and the U.S. held their first trilateral security working group talks since the escalation of the conflict in February 2022, in Abu Dhabi, UAE. All parties described the dialogue as “constructive,” but core disagreements over territories like Donbas remain sharp, with no signs of easing.
3) Middle East Tensions
On January 25, the U.S. Navy’s “Abraham Lincoln” carrier strike group arrived in the Middle East and is conducting operations within U.S. Central Command’s area of responsibility. The U.S. Air Force announced that a multi-day combat readiness exercise would be launched in the Middle East. The exercise aims to demonstrate the U.S. military’s ability to deploy and sustain air combat forces in the region. On the same day, Mohsen Sani, a member of Iran’s Parliament’s National Security and Foreign Policy Committee, stated that Iran’s armed forces are on full alert in response to the enemy’s current military deployments.
2. Federal Reserve Rate Cut Expectations
A rate cut by the Federal Reserve would significantly reduce the opportunity cost of holding gold. Lowering interest rates would directly decrease the risk-free yields of dollar assets such as U.S. Treasuries and bank deposits. When yields on these fixed-income assets decline, investors holding gold forgo less interest income, greatly reducing the opportunity cost of holding gold.
Trump once said: When the market rises, the Fed should cut rates. In the past, when the economy was good, rates would fall. The Fed has a real stubborn streak. The Fed Chair has killed every economic rebound. Powell “will be leaving soon.” “U.S. (December) inflation data just came out, very low! This means Jerome ‘Too Late’ Powell should cut rates sharply! If not, he will just keep being ‘Too Late’! Moreover, U.S. economic growth data is also very good. Thanks, Mr. Tariff!”
Bain & Company’s G3 economic research director Brian Martin stated that the Fed might keep rates unchanged in January, but the idea of a long pause in rate cuts lacks solid basis. He expects the Fed to cut the federal funds rate by 25 basis points in March, and again by 25 basis points in June, bringing the mid-year target rate to 3%-3.25%. Martin predicts U.S. inflation will gradually ease by 2026.
3. Global Central Bank Gold Buying Wave
On January 20, the Polish central bank announced approval of a plan to purchase up to 150 tons of gold, increasing its gold reserves to 700 tons. “This will place Poland among the top 10 countries globally in gold reserves.”
According to data from the People’s Bank of China, China’s gold reserves at the end of December were 74.15 million ounces (about 2,306.323 tons), an increase of 30,000 ounces (about 0.93 tons) from the previous month, marking the 14th consecutive month of gold accumulation.
Chris Weston, research director at Pepperstone, noted in a report that gold is increasingly seen as a hedge against the “unpredictability” of Trump’s policies. Although many traders view gold as a hedge against the risk of a U.S.-EU tariff war triggered by Trump over Greenland, Weston pointed out that even if the tariff threats are lifted, gold’s rally has not subsided. He added that central banks worldwide, especially those in emerging markets, are almost daily seeking reasons to shift reserves from dollars to gold.
2. Why is the crypto market continuing to decline?
1. U.S. Government Shutdown Possible Again
On January 10, Trump stated that a U.S. government shutdown could happen again on January 30. According to Polymarket data on January 26, traders estimate a 78% chance of another government shutdown before the end of January, up 68% in the past 24 hours.
A government shutdown would withdraw dollar liquidity from the market, reduce risk appetite, and trigger capital outflows from high-risk assets like crypto, which is unfavorable for crypto prices in the short term.
2. “CLARITY Act” Stalled
Previously, Coinbase publicly opposed the current version of the “CLARITY Act.”
On January 15, Coinbase CEO Brian Armstrong said that after reviewing the Senate Banking Committee’s crypto bill draft, Coinbase cannot support this version of the legislation. Major issues include: de facto ban on tokenized stocks; restrictions on DeFi, granting the government unlimited access to personal financial records and weakening privacy; weakening CFTC authority, stifling innovation, and subordinating it to the SEC; and potential amendments that could kill stablecoin incentives and allow banks to block competitors. Armstrong stated that the draft is “worse than the status quo,” preferring no bill over a bad one, but remains optimistic about reaching a more reasonable version through continued collaboration, emphasizing that the crypto industry should receive regulatory treatment equal to traditional finance in the U.S.
If the U.S. government shuts down again, it will further increase uncertainty about the passage of the “CLARITY Act.”
3. Regulatory Tightening
On January 20, reports indicated that the Netherlands plans to tax unrealized capital gains on a range of investments including stocks, bonds, and cryptocurrencies. This tax plan has drawn strong criticism from investors and crypto industry figures, warning that it could accelerate capital flight.
At the end of last year, the European Securities and Markets Authority (ESMA) prepared to strengthen and centralize regulation of the EU crypto asset market, further enforcing MiCA (Markets in Crypto-Assets Regulation). Multiple national regulators, including the French Financial Markets Authority (AMF), called for clear rules within the MiCA framework that trading and execution activities (including local order books) must be conducted within the EU and under local regulation. ESMA’s move may mean banning EU crypto platforms from sharing order books with non-EU, non-MiCA-regulated exchanges to ensure regulatory consistency.
Nicolas de Coninck, a financial services lawyer at Norton Rose Fulbright, said: “Historically, crypto trading firms have shared liquidity with non-EU platforms, so any changes will be closely related to most crypto exchanges and also to proprietary trading firms and many other market participants involved in crypto trading. This will further promote price formation within the EU and impact order flow and overall liquidity. The larger the liquidity pool, the better the liquidity for platforms and users in the end. I think forcing the creation of EU-only liquidity pools could lead to fragmentation and initially widen spreads; markets will adapt, but this adjustment won’t be immediate.”
4. ETF Net Outflows
Data shows that last week, spot Bitcoin ETFs experienced net outflows of $1.33 billion, and Ethereum spot ETFs saw net outflows of $611 million. Institutional redemptions are seen as a bearish signal, raising concerns about “large capital withdrawals,” prompting retail and quant funds to follow suit and sell. Net outflows also reduce market liquidity, widen bid-ask spreads, and small trades can trigger large volatility, increasing market fragility, leading investors to hold back or withdraw, creating a vicious cycle.
3. BTC Market Outlook
Coinbase’s Q1 2026 crypto trend report states that a survey of 75 institutional investors and 73 individual investors from early December to early January found that 71% of institutions and 60% of individuals “believe Bitcoin is undervalued.”
Santiment notes that the crypto market is in an “uncertain phase, retail investors are withdrawing, and funds and attention are shifting to more traditional assets. Meanwhile, signals like supply distribution and lack of social discussion suggest a bottom may be forming. Patience might be the best approach.”
Global macro research firm The Bitcoin Layer founder Nik Bhatia believes that part of the reason for the bearish market sentiment could be recent metal price surges. “Gold is approaching $5,000, silver is at $100, and since Bitcoin didn’t catch the rally in precious metals, market sentiment is very bearish, almost reminiscent of the bear market when Bitcoin dropped to $17,000 after the FTX event. I remain optimistic about the market, but it’s a painful bullish sentiment dominated by fear—you have to overcome it.”
4. Is BTC Truly a Safe-Haven Asset?
A safe-haven asset, also known as a secure asset, refers to an asset that remains relatively stable or even appreciates during economic downturns, market volatility, geopolitical conflicts, and other risk events, helping investors hedge risks and preserve asset value. Its core characteristic is low or negative correlation with risk assets.
However, due to the high volatility of the crypto market compared to gold and silver, Bitcoin is considered a high-risk asset.
Alex Thorn, research head at crypto financial services firm Galaxy Digital, said: “What we’re seeing now is geopolitical uncertainty, gold hitting new all-time highs again, and Bitcoin underperforming. At least in real-time, Bitcoin has not fully fulfilled its original design purpose.”
Analyst Dean Chen pointed out: “Bitcoin is currently in a fragmented narrative state. Among native crypto investors, it’s increasingly seen as a geopolitical hedge and a non-sovereign store of value. However, for the broader market, Bitcoin is still mainly viewed as a high-beta risk asset.”
Duke University’s Campbell Harvey noted: “While these two assets share some characteristics, the unique aspects of cryptocurrencies—such as potential blockchain attacks and existential threats—make it unlikely that Bitcoin will replace gold as the preferred safe-haven asset.”
Other crypto market observers believe:
Investment decisions are often based on beliefs, so if enough people believe Bitcoin is a safe-haven, it will become one. But the problem is, far fewer people believe in Bitcoin than impulsive gamblers and scammers. Therefore, it has not played a safe-haven role; instead, it’s more like a slot machine.
People are rushing to buy gold now because they think inflation might rebound, and gold tends to outperform inflation over the long term. Although Bitcoin (Buttcoin) has indeed outperformed inflation, this is mainly because it’s a speculative asset whose actual value isn’t much higher than Tesla stock, and may even be lower. For knowledgeable investors, gold is a good hedge against declining bond yields and stock market uncertainties, but cryptocurrencies are not, and never will be.