Gold, Silver, and Bitcoin Slide as ‘Debasement Trade’ Loses Steam

Precious metals have dropped steeply from their 2025 peaks as markets increasingly factor in the likelihood of Federal Reserve rate hikes.

Gold and silver have both pulled back significantly from their January highs, slipping below key psychological levels. Gold has declined about 28% from its peak near $5,600 and is now trading under $4,000 per ounce, while silver has plunged more than 50%, falling below $59 per ounce.

The downturn has been driven largely by rising expectations of tighter monetary policy under new Federal Reserve Chair Kevin Warsh. Investors are now pricing in two 25-basis-point rate increases by March 2027, which would push the federal funds rate into the 4.00%–4.25% range amid renewed inflation concerns.

This shift represents a sharp reversal from 2025’s dominant “debasement trade” narrative—the view that persistent fiscal deficits and growing government debt would steadily weaken fiat currencies.

Bitcoin, meanwhile, showed limited momentum for much of 2025, hovering around $100,000 even as gold and silver rallied strongly. This divergence prompted some investors to question whether bitcoin still fits the debasement trade or if its role as a hedge against currency dilution has diminished.

During the broader correction, bitcoin has also declined, now trading below $62,000—about 50% off its October all-time high—and slipping under its long-term 200-week moving average near $62,800.

One positive note for bitcoin supporters is that the asset has outperformed both gold and silver since relative ratios bottomed in February, rising roughly 30% versus gold and more than 55% against silver.

Still, all three assets have trailed U.S. equities in 2026, where gains have been largely driven by semiconductor and memory-related stocks.