The same dynamic that drove investors toward NFTs and smaller coins during the pandemic-era crypto boom is currently playing out with gold and silver, according to Bitwise CIO Matt Hougan.
As the precious metals scale new heights, he told Decrypt that investors appear to be rotating profits from one asset to the other in a way that parallels previous spillovers in crypto, where investors trimmed profitable positions in search of greater gains.
“What you’re seeing in these other metals like silver is just a classic altcoin cycle in metals,” Hougan said. “They made money in gold, now they’re going out the curve.”
With an estimated market cap of $34 trillion, the price of gold has surged 80% over the past year, creating massive amounts of wealth on its way toward $5,000 per ounce. Meanwhile, the price of silver has increased 228%, passing $100 per ounce for the first time on Friday.
“In any bullish market, when you have that much wealth created, of course it's going to spill over,” he said. “If you have a $15 trillion wealth event spill over into a $2 trillion market, the price goes parabolic, and then it spills over to what's next.”
Since the crypto market bottomed out in 2022, following the collapse of prominent exchange FTX, Bitcoin’s share of the crypto market has risen steadily from 36%. That period has been marked by the debut of exchange-traded funds tracking the spot price of Bitcoin and other digital assets, allowing financial institutions to gain exposure where they couldn’t before.
