The market is sharply reconsidering one of the main ideas of 2025. Investors are reducing positions in gold, silver, and bitcoin, which they previously bought as protection against rising government debt, deficits, and the depreciation of fiat currencies.
Now this trade is reversing. The reason is expectations of a tighter Fed policy. If the rate goes up again, defensive assets have a harder time competing with the dollar, bonds, and stocks, where capital sees more predictable returns.
Precious Metals Have Fallen Far From Their Highs
Gold has fallen below $4,000 per ounce. This is about 28% below the January 2025 high, when the price reached $5,600.
Silver dropped even more sharply. After a record near $120, the metal lost more than half its value and was trading below $59 on Wednesday.
Such a pullback shows that investors are no longer willing to pay the previous premium for defensive assets. In 2025, gold and silver benefited from fears about fiscal policy and monetary emission. Now the market is looking at rates again.
The Fed Has Put Pressure Back on Defensive Assets
The main shift is due to expectations for Fed policy. After Kevin Warsh took over, investors began to price in a more hawkish scenario.
The market is now estimating the probability of two rate hikes of 25 basis points each by March 2027. If this scenario plays out, the federal funds rate range could rise to 4.00–4.25%.
This is a tough backdrop for gold, silver, and bitcoin. These assets do not provide interest income. The higher the rate, the more attractive dollar instruments become, and demand for protection against currency depreciation weakens.
The Old Macro Story Has Broken Down
In 2025, the dominant market idea was that chronic budget deficits and rising US government debt would erode the dollar’s purchasing power. This was the basis for the bet on gold, silver, and partly bitcoin.
The logic was clear. If the government borrows more and more, and the monetary system loses trust, investors look for assets with limited supply or a historic safe haven status.
But this story works less well when the market is again expecting rate hikes. More expensive money temporarily strengthens the dollar and reduces the urgency to move into alternative assets.
Bitcoin Has Not Become the Main Winner
BTC’s weakness has become especially noticeable. In 2025, gold and silver were rising actively, while bitcoin stayed around $100,000 for a long time and did not show the same strong movement.
This raised questions about its role in protecting against fiat currency depreciation. If BTC was really supposed to be the main digital answer to debt risks, it should have participated more strongly in that trade.
Now the picture has become even tougher. Bitcoin has fallen below $62,000, losing about 50% from its October all-time high. Additionally, the price has dropped below the 200-week moving average, which is around $62,800.
BTC Looks Weak Against Stocks but Stronger Than Metals
For bitcoin supporters, there is one important argument. Despite the drop in dollar terms, BTC has strengthened against gold and silver since February.
Since the low in these ratios, bitcoin has risen about 30% against gold and more than 55% against silver. This means that within the group of ‘defensive’ assets, BTC does not look the weakest.
But this is not enough to call the picture strong. In 2026, all three assets are underperforming US stocks. Money is going where the market sees profit growth, not just protection from macroeconomic risks.
Stocks Have Taken Capital From Defensive Assets
The main competitor for gold, silver, and bitcoin is not the dollar itself, but the US stock market. Especially companies related to semiconductors, memory, and artificial intelligence.
That is where the main market interest is concentrated. Investors are buying stocks where they see clear revenue growth, demand for computing infrastructure, and strong forecasts.
Against this backdrop, defensive assets look less convincing. Fears about debt and deficits have not disappeared, but for now, capital is choosing the growth story, not the fear of future currency depreciation.
Why Silver Is Falling More Than Gold
Silver is usually more volatile than gold. It combines the properties of a defensive metal and an industrial commodity, so it reacts more strongly to changes in economic and liquidity expectations.
When rates rise and investors reduce risk, silver is often sold more aggressively. That is why its drop from the high has been deeper than gold’s.
For the metal to recover, it needs not only lower rates or a weaker dollar. A broader return of demand for real assets is needed, and confidence that the industrial part of demand will not deteriorate.
The Long-Term Support Zone Is Important for Bitcoin
A drop below the 200-week average makes the situation for BTC more sensitive. This level is often seen as the boundary of a long-term market regime.
If bitcoin quickly returns above this zone, the decline may remain part of a deep correction. If the price stays below, the market will start to discuss lower levels and the risk of capitulation more actively.
In such a situation, BTC will depend on several factors at once: ETF flows, the Fed rate, demand from the US, and the behavior of tech stocks.
What’S Next?
For gold, silver, and bitcoin, the key will not be the fact of the decline itself, but the further trajectory of rates. If inflation remains high and the Fed continues to prepare the market for hikes, defensive assets may remain under pressure.
If, however, the data begin to soften and rate expectations turn down again, the bet on currency depreciation may get a second life. In this scenario, gold, silver, and BTC will again become more interesting for investors who fear long-term weakness of fiat currencies.
The main takeaway is simple. The market has not abandoned the idea of protection against debt and monetary emission forever. But for now, this idea has been pushed aside by expectations of a more hawkish Fed and strong performance by US stocks. As long as capital is going into semiconductors and AI, it will be difficult for gold, silver, and bitcoin to regain the role of the main macro trade.
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