Bitcoin’s growth potential remains limited as capital flows into precious metals.
Capital flows into “safe havens” are bolstering the prices of precious metals. Meanwhile, the potential for growth in the leading cryptocurrency remains limited, according to analysts at XWIN Research Japan.
They observe that the current phase of the crypto market is characterized by consolidation within a range following a correction from local highs. The momentum is tilted towards a decline.
Gold and silver prices have continued to rise over the past three months, while Bitcoin has remained in a sideways trend.
“This divergence is explained by investors moving to traditional safe assets amid geopolitical tensions and the anticipated rate cuts,” the experts explained.
According to them, the availability of instruments also plays a crucial role: “It is technically easier for institutions to allocate capital into precious metals.”
The leading dynamics of silver were driven by a supply deficit in the market and high speculative interest.
The leading cryptocurrency has lagged behind the overall trend, as investors continue to perceive it as a highly volatile asset with increased risk, rather than a “safe haven.”
“In times of uncertainty, capital flows into gold and government bonds, while cryptocurrencies receive attention on a residual basis,” noted XWIN.
Unlike precious metals, which rely on a base of long-term holders, Bitcoin’s price “is heavily dependent on speculative positions.” For a sustainable upward trend to form, macroeconomic factors alone are not yet sufficient, the researchers emphasized.
Statistics from CryptoQuant confirm the market’s weakness. The Apparent Demand indicator has entered negative territory — new buyers are not coming in, “despite high prices.”
The situation is exacerbated by the behavior of short-term investors: the STH SOPR metric is predominantly below one.
“This means that speculators are locking in losses or breaking even, increasing selling pressure with any attempts at price growth,” the analysts explained.
According to their forecast, low demand will continue to restrain Bitcoin as capital flows into precious metals. The base scenario suggests continued support for gold and silver as safe assets with limited potential for cryptocurrency.
A trend reversal will be marked by the return of Apparent Demand to “positive territory” and the consolidation of STH SOPR above the threshold level of 1, the researchers concluded.
