Gold frenzy vs. crypto silence: Is it a victory for TradFi, or the eve of a new cycle?

By the end of 2025, the global financial markets present a rare “ice and fire” landscape. Traditional precious metals, represented by gold and silver, continue to surge, with gold futures prices breaking through $4,550 per ounce, setting over 50 historical records within the year, and silver experiencing an astonishing 150% annual increase. Meanwhile, the once highly anticipated cryptocurrency market has faded into the background, with Bitcoin down about 6% year-to-date, and Ethereum falling approximately 12%, facing three consecutive months of decline. This extreme divergence has led to rampant discussions that “cryptocurrencies are dead, switch to gold.” However, a deeper look into market structure reveals that profound changes are underway beneath the surface: capital from TradFi (traditional finance), centered around ETFs, is pouring into the crypto market at an unprecedented scale and discipline. This is not merely capital fleeing, but more like a prelude to asset reallocation driven by macro narratives and microstructures.

Surface Disputes: The “Parabolic” Rise of Precious Metals and the “Silent Spring” of Crypto Assets

Looking back at 2025 from the end, the bull market in gold and silver is textbook-worthy. Gold prices stabilized above the historic high of $4,550, with over 70% growth this year, making it one of the most dazzling mainstream assets. The core drivers are clear and traditional: sustained central bank purchases, its appeal as a safe haven amid economic uncertainty, and lower volatility and better market liquidity compared to cryptocurrencies. Long-term crypto critic Peter Schiff bluntly mocked, “If Bitcoin doesn’t rally when tech stocks rise, and doesn’t rally when gold and silver rise, then when will it rally? The answer is: it won’t.”

On the other side, the cryptocurrency market, especially Bitcoin, has fallen into a decoupling from stock performance for the first time since 2014. Its price retreated about 30% from the October high of nearly $126,000 to around $87,000. This weakness is partly attributed by some TradFi analysts to profit-taking by long-term holders, chain liquidations of high-leverage positions, and seasonal rebalancing during the year-end “Santa rally,” where investors tend to sell losing assets and buy winners. Louis Navellier, founder of Navellier & Associates, notably said, “Gold has risen nearly 70% this year, while most cryptocurrencies have negative returns. The time for crypto community to shift to gold has arrived.”

However, this simple comparison based on price appearances may seriously misinterpret the structural changes happening. The true turning point in the 2025 crypto market is “not in price, but in structure.” Its core feature is that capital is shifting from retail-dominated rapid flows to institutional-led allocations via TradFi channels. The current market silence may precisely reflect the “orderly” behavior of institutional capital building positions within a compliant framework, rather than a demand exhaustion signal.

Structural Changes: How TradFi Entry Reshapes Cryptocurrency Pricing Logic

To understand why the current crypto market appears “weak” while precious metals are “strong,” one must analyze the fundamental shift brought by TradFi capital inflows. Early on, the crypto market was driven by retail sentiment, social media narratives, and short-term speculative capital, resulting in highly nonlinear price volatility. However, in 2025, with the maturation of US spot Bitcoin and Ethereum ETFs and large-scale capital inflows, the market has experienced a qualitative change in “marginal buyers.”

Institutional behavior differs sharply from retail. They do not chase prices based on FOMO but incorporate crypto assets into long-term portfolios, making decisions based on asset allocation models, risk budgets, and macro interest rate environments. This capital tends to trade less frequently, hold positions longer, and build positions gradually and disciplinarily. This directly leads to reduced overall market volatility and a moderation of sharp price swings. Therefore, Bitcoin’s current consolidation at relatively high levels can be interpreted as digesting early profit-taking while steadily absorbing institutional inflows, rather than losing upward momentum.

More critically, institutional participation has significantly increased the correlation between crypto assets and traditional macro variables. When the main buyers are hedge funds, pension funds, and family offices, their decisions are heavily influenced by Federal Reserve rate paths, US dollar liquidity, and global risk appetite shifts. The market in 2025 clearly shows that cryptocurrencies are transitioning from a “narrative-driven, sentiment-based” phase to a “liquidity-driven, macro-priced” new stage. From this perspective, cryptocurrencies and gold are beginning to intersect in their macro-hedging properties; they are not simply substitutes but may jointly serve as options to hedge against fiat devaluation or specific economic risks under a new macro paradigm.

Looking at key asset performances and drivers, we see a clear contrast: traditional precious metals, with gold reaching new highs and an annual gain of nearly 70%, driven by central bank gold purchases, safe-haven demand, and low volatility, remain under traditional TradFi logic; industrial metal silver achieves a 150% annual increase, fueled by industrial and investment demand and concerns over physical shortages. In the crypto space, flagship Bitcoin has retraced about 30% from its high, down roughly 6% year-to-date, with its core support shifting to long-term allocations via ETFs and macro liquidity expectations—its market structure is shifting from retail to institutional marginal buyers; Ethereum, a smart contract platform, has fallen about 12% this year but has gained increased institutional holdings, with staking yields and real-world asset narratives attracting yield-focused capital. Interestingly, institutional holdings in Ethereum have surpassed Bitcoin in this domain.

Deep Binding: Regulatory “Green Light” and Institutional Actions Reveal Long-term Confidence

Despite price pressures, substantial moves from regulators and TradFi giants paint a markedly optimistic picture for the long-term fundamentals of cryptocurrencies. On the regulatory front, the US SEC’s approval of the “General Listing Standards” in September 2025 is milestone-worthy. This standard paves the way for faster approval of spot ETFs for more cryptocurrencies (such as Solana, XRP, etc.), seen as a key institutional breakthrough for integrating crypto assets into mainstream finance. It signals a shift from “whether to allow” to “how to regulate,” clearing the biggest obstacle for large-scale, compliant TradFi capital entry.

Institutions have expressed their judgments through concrete actions. According to a report from Swiss bank Sygnum, up to 61% of institutional investors plan to increase digital asset allocations in Q4 2025. Their investment logic has shifted from early “chasing big narratives” to more mature “diversified asset allocation.” This is not only about seeking high returns but also about participating in the evolution of the global financial structure.

Regarding holdings, subtle but important changes are evident. On-chain data shows that by the end of Q3 2025, corporate treasuries hold 3.59% of their circulating supply of Ethereum, surpassing Bitcoin’s 3.49% for the first time in history. This highlights institutional preference for Ethereum’s “productive asset” attributes—potential for capital appreciation, stable yields through staking, and as a core infrastructure for DeFi and real-world assets generating cash flow. Traditional giants like BlackRock, JPMorgan, and Goldman Sachs are deepening their presence in crypto custody, blockchain payments, and tokenized funds, further exemplifying the deep integration of TradFi and the crypto world.

Future Battles: Opportunities in Liquidity Tides and Asset Rotation

What will the market look like in 2026 amid current divergence? The answer still hinges on macro liquidity tides and the intrinsic narratives of different assets.

For gold, whether its rally can continue depends on whether central banks keep buying, global geopolitical risks, and real interest rate changes. The current surge driven by physical shortages and safe-haven sentiment needs new catalysts to sustain the “parabolic” trend.

For cryptocurrencies, hope may be on the horizon. Several institutional analysts believe that factors suppressing prices in the short term are weakening. Fundstrat’s digital asset head Shawn Farrell pointed out that, with December possibly ending with a bearish candle, historical seasonal patterns suggest a higher probability of a rally in January. Crypto research firm 10X Research also sees the potential for a “more sustained rebound”: a 30% deep correction, a decline lasting about two and a half months, and fully reset technical indicators. This provides space for market respite and bottoming.

A larger variable is macro-level. While institutions like Standard Chartered have lowered short-term target prices, they generally believe Bitcoin still has the potential to challenge $150,000 in 2026. The core logic is that the market expects the Fed’s rate cut cycle to reshape global liquidity. When dollar liquidity loosens, risk assets sensitive to interest rates—including deeply institutionalized cryptocurrencies—will receive strong valuation support. At that time, cryptocurrencies and gold may shift from the current “see-saw” relationship to assets that benefit together under a “weak dollar” narrative.

From an institutional perspective, observing the current market cycle and strategies, gold and silver are in a strong bull market phase, with high sentiment. Their future drivers include central bank demand, safe-haven attributes, and inflation hedging, with institutional views generally bullish. The crypto market, meanwhile, is in a deep correction and consolidation stage within a bull market. Despite subdued sentiment, market structure is improving, and future drivers will depend on TradFi allocations, macro liquidity shifts, ETF product expansion, and technological upgrades and application ecosystems. While short-term cautious, institutions are optimistic about 2026, viewing the current as a window for long-term positioning. Potential risks include a rapid technical correction in gold after sharp rises and a sharp shift in global risk appetite that could weaken safe-haven demand; for crypto, risks include macro liquidity recovery falling short, new regulatory uncertainties, and high volatility during structural transitions.

Rational Choices: Finding Balance and Opportunities in a Diverging Market

For investors, choosing exclusively between gold or cryptocurrencies may not be optimal. A more rational approach is to understand the deep logic behind this divergence and adapt accordingly.

First, an upgraded framework of understanding. It’s essential to recognize that the crypto market has “changed tracks.” Analyzing and trading based on the past retail-dominated, emotion-driven framework is no longer effective. Instead, focus on macro and professional data like Federal Reserve policies, interest rate expectations, ETF fund flows, and institutional holdings, similar to traditional assets.

Second, rebalancing asset allocation. Gold and cryptocurrencies can serve different roles in a portfolio. Gold, as a classic “safe-haven” and risk hedge, helps reduce overall portfolio volatility. Cryptocurrencies like Ethereum, with its productive yield and ecosystem growth potential, represent growth exposure to the digital future. Combining both can hedge risks and cover different narrative cycles.

Finally, disciplined execution of strategies. In the current environment of low retail sentiment but ongoing institutional accumulation, adopting a “core-satellite” strategy and dollar-cost averaging may outperform one-time chasing. Hold Bitcoin and Ethereum as “core” long-term positions, while exploring other mainstream assets via new ETFs with small positions. Monitoring January’s market performance for signs of trend reversal could signal the start of a new liquidity-driven cycle from TradFi.

Ultimately, today’s gold rally reflects the victory of traditional value storage narratives under specific macro conditions; while the crypto market’s temporary silence may be a prelude to a deeper, TradFi-led financial system transformation. Market noise always exists, but the trajectory of capital flows and institutional development remains the more reliable map to future directions.