Increasing geopolitical tensions in global markets highlighted the stark divergence between precious metals like gold and silver and cryptocurrencies. While gold and silver climbed to record levels amid growing trade war concerns, Bitcoin sharply depreciated in the same period. The new tariff policies expected to be implemented at the start of February have reshaped investors’ risk perceptions, intensifying the search for safe havens as the cryptocurrency market faced significant selling pressure.
Historic Surge in Gold and Silver
The price of gold surged to $4,683 per ounce, marking an all-time high with a year-on-year increase of approximately 70%. Silver’s movement was even more pronounced, surpassing the $94 threshold and reaching $94.21, achieving a year-on-year rise of over 190%. The global increase in uncertainty accelerated investors’ shift toward traditional value-preserving assets.
The primary catalyst behind this rally was U.S. President Donald Trump’s announcement of a 10% tariff on eight European countries, including Germany, France, the United Kingdom, and several Scandinavian nations. The warning that these tariffs might rise to 25% by June has increased expectations of a reignited trade war. The emergency meetings in European capitals and rising diplomatic tensions further fueled the demand for precious metals.
Sharp Decline in Bitcoin and Cryptocurrency Markets
During the same period of rising precious metals, Bitcoin’s price plunged about $6,000 in one day, settling around $91,893 and later stabilizing near $92,000. Market data revealed that Bitcoin is still considered a risky asset class during global shock events, as funds flowed into gold and silver instead of cryptocurrencies.
In the institutional arena, a cautious stance became prominent. Spot Bitcoin ETFs saw a net outflow of approximately $394.7 million while only $15 million trickled back in, showing limited interest. The price drop led to the swift liquidation of leveraged trades, resulting in over 240,000 investor positions being closed in the last 24 hours, with total losses reaching $864 million. This indicated the prevalence of bullish sentiment, as around 90% of the losses emerged from long positions.
The selling pressure was not limited to Bitcoin alone. Ethereum fell by approximately 3.5%, while XRP, Solana, and Cardano depreciated between 5% and 8%. Experts anticipate that the pressure on cryptocurrencies will persist if trade tensions remain unresolved.