Precious metals, such as gold and silver, are once again capturing investor attention. Both assets have recently soared to record highs due to geopolitical concerns and inflation worries fed by the tariff war.
Gold's price hit $4,549 an ounce and silver's price hit $83.62 a few days back, unlocking higher projections from market analysts.
These assets have outperformed most other major asset classes, leaving Wall Street to speculate about the fate of other assets.
Historically, when gold and silver prices soar first, they are not signaling the end of a cycle; instead, they often signal the beginning of a new one.
Related: Gold’s $2.5 trillion wipeout claims an unlikely casualty
Analyst draws parallel between current market and 2020
Bull Theory, a popular market researcher, drew parallels between the current metal rally and the one in mid-2020.
When the central bank pursues a policy of monetary easing, liquidity inflow increases, and cash first flows into assets considered safe havens, the analyst explained in a long X post .
Investors have long viewed gold as such an asset that acts as a hedge against U.S. dollar devaluation. So, gold tends to react quicker than stocks.
Silver has both a monetary and industrial value, and it also tends to follow gold's price move.
Bull Theory gave the example of a similar pattern playing out after the March 2020 market crash due to the coronavirus pandemic.
At that time, when the Federal Reserve injected liquidity to stabilize the financial system, gold and silver rallied sharply over the following months.
Gold rallied from $1,450 per oz to $2,075 per oz by August 2020. Silver rallied from $12 to $29 during the same period.
"Historically, it has been the early signal."
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However, risk assets like Bitcoin (BTC) didn't immediately rally and remained within the $9,000-$12,000 price range. It happened so not because economic conditions were bearish, but because capital was still flowing rather defensively.
Only after precious metals peaked did money rotate decisively into higher-risk assets like Bitcoin, the analyst underlined.
Later, Bitcoin's price rose from $12,000 in August 2020 to $64,800 in May 2021.
The rotation of capital underlines the transition from fear-driven positioning to growth-driven investment.
The current market cycle reflects several similarities to 2020.
Currently, gold and silver are hitting record highs, but Bitcoin is trading below $90,000. The king coin's current price is nearly 30% lower than its all-time high (ATH) of $126,198.07 that it hit in early October.
Related: BlackRock hits record milestone in payouts
Analyst explains why risk assets are lagging
Bitcoin’s sideways behavior has frustrated crypto investors, especially after a sharp pullback from its record high. But viewed through a historical lens, this price action may be less concerning than it appears, suggested Bull Theory.
In previous cycles, Bitcoin did not rally alongside gold or silver. It soared only after the precious metals had already gone parabolic.
Following the 2020 crash, Bitcoin spent months trading in a relatively narrow range while the bullion surged. That period of consolidation ended abruptly once capital rotated out of defensive positions and into risk assets like Bitcoin.
What followed was one of the strongest rallies in Bitcoin’s history.
Why 2020 was different
History doesn’t repeat to the minutest detail; instead, it often rhymes. Though the current market cycle has several similarities to 2020, not everything remains the same, Bull Theory highlighted.
While liquidity was the primary catalyst in 2020, the current cycle includes multiple catalysts.
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Fed injecting liquidity
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Rate cuts could continue
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Increased crypto regulation clarity
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Potential dividend cheques
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More crypto ETFs expected
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Large asset managers offering crypto
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Pro-crypto candidate to lead Fed
Unlike last time when only liquidity triggered the Bitcoin rally, there are several liquidity- and structure-related catalysts that come together this time, the analyst argued.
"The setup looks very similar, but with more fuel. Gold and silver moving first is not bearish for crypto."
When liquidity returns, capital seeks higher returns elsewhere. That is when assets like Bitcoin tend to soar.
A 'calm before the storm'
Bull Theory compared the current sideways price action in Bitcoin to "a calm before the storm."
The current price action, though it troubles the traders, isn't the start of a bear market.
If the historical pattern repeats, precious metals like gold and silver peaking first could be less of a warning sign and more of an early signal of the upcoming Bitcoin rally, the analyst indicated.
Related: Standard Chartered predicts 330% price surge for XRP
This story was originally published by TheStreet on Dec 31, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
