Gold, Silver and Bitcoin Slide as the "Debasement" Bet Gets Unwound
A stampede into artificial intelligence stocks is siphoning money from other corners of the market, including traditional safe havens and speculative crypto. Gold fell below $4,000 earlier this week for the first time since November. Silver is down more than half from its peak, and bitcoin has slipped to around $58,000.
The parallel declines are not random. For much of the past two years, gold, silver and bitcoin have effectively been part of the same macro wager: the so-called "debasement" trade. The premise is that heavy government spending and rising public debt gradually erode the purchasing power of paper currencies, steering investors toward scarce assets that cannot be printed. Gold and silver are the classic versions of that bet. Bitcoin, with supply capped at 21 million coins, has been promoted as a digital counterpart.
Through 2025, as the dollar appeared vulnerable, inflows treated the trio as a single basket. Now the same forces that grouped them on the way up are pushing them down. New Federal Reserve Chair Kevin Warsh opened his tenure with a hawkish message, and markets are pricing in two quarter-point rate increases by March 2027. That would take the Fed's benchmark rate to 4.00% to 4.25%. The U.S. dollar is up 0.8% this week.
Higher rates and a firmer dollar typically pressure hard assets. Rising rates lift real yields—the inflation-adjusted return on safer assets such as Treasuries—raising the opportunity cost of holding gold, silver or bitcoin, which offer no yield. A stronger dollar also makes all three costlier for buyers using other currencies. When gold and silver weaken, it often signals that the macro backdrop has turned against the debasement narrative.
Bitcoin's role in that basket has long been uneasy. For much of 2025, gold and silver surged while bitcoin moved sideways near $100,000, reviving doubts about whether it still functioned as a hedge against currency dilution. The uncomfortable twist now is that bitcoin lagged the metals on the way up but is closely tracking them on the way down.
The reversal has been sizable. Gold has fallen about 28% from its January 2025 record near $5,600. Silver has dropped more than 50% from around $120. Bitcoin is down roughly 50% from its October high, pushing it below its 200-week moving average—a widely watched long-term floor—near $60,000.
One relative positive for bitcoin holders comes with a caveat. Since the ratios bottomed in February, bitcoin has outperformed both metals, rising about 30% versus gold and more than 55% versus silver. Bitcoin continues to trade as two things at once: a speculative risk asset and a hard-money hedge. For now, both signals are pointing in the same direction.
The debasement trade helped power bitcoin higher alongside gold and silver; its unwind is dragging it lower with them. If the Fed maintains a hawkish stance and the dollar stays firm, bitcoin may struggle to decouple from the metals it has been compared with for years.
