Why the Rise in Silver Mirrors the Altcoin Boom in Crypto: Insights from a Bitwise Executive

Investor Behavior Shifts from Crypto to Precious Metals

Bitwise CIO Matt Hougan has observed that the same investor enthusiasm that once fueled the rise of NFTs and lesser-known cryptocurrencies during the pandemic is now evident in the gold and silver markets.

Speaking with Decrypt, Hougan explained that as gold and silver prices reach unprecedented levels, investors are reallocating their profits between these assets. This mirrors the pattern seen in crypto markets, where gains from established coins are often moved into riskier assets in search of higher returns.

“The movement we're seeing in metals like silver is reminiscent of an altcoin rally, but within the precious metals sector,” Hougan remarked. “After profiting from gold, investors are now venturing further along the risk curve.”

Gold and Silver Reach New Peaks

Gold’s market capitalization has soared to approximately $34 trillion, with its price climbing 80% over the past year and approaching $5,000 per ounce. Silver has experienced even more dramatic growth, jumping 228% and surpassing $100 per ounce for the first time.

According to behavioral economics, when investors see their wealth increase, they tend to spend more—a phenomenon known as the “wealth effect.” Hougan noted that this effect is also visible in financial markets, especially as investors look beyond major assets like Bitcoin and gold to smaller digital assets.

“In any strong market, the creation of significant wealth inevitably spills over,” he said. “If $15 trillion in new wealth flows into a $2 trillion market, prices can skyrocket, and the momentum continues into the next opportunity.”

Other Precious Metals and Crypto Comparisons

Silver’s market value, which was under $2 trillion not long ago, has now reached an estimated $5.6 trillion, according to Companies Market Cap. Other metals like cobalt and palladium have also doubled in price over the past year.

Meanwhile, cryptocurrencies such as Ethereum, Solana, and XRP collectively have a market cap of $453 billion. These assets are generally more volatile than Bitcoin, which, at $1.8 trillion, represents 58% of the crypto market according to CoinGecko.

Hougan added, “In a bull market, profits from leading assets often trigger a chain reaction, with investors moving into increasingly speculative investments. Eventually, this can lead to purchases of unusual assets like EtherRocks or other high-priced NFTs.”

The NFT Craze and Market Evolution

Four years ago, a JPEG image of a rock sold for the equivalent of $843,000 in Ethereum on OpenSea. Despite their rarity—only 100 exist—these collectibles offer little practical use compared to other digital assets or precious metals.

Since the crypto market downturn in 2022, following the collapse of FTX, Bitcoin’s dominance has steadily increased from 36%. The introduction of spot Bitcoin ETFs and similar products has enabled more institutional investors to participate in the market.

Changing Dynamics in Crypto Markets

Market watchers have long used Bitcoin’s share of the crypto market as a signal for upcoming altcoin rallies. However, the landscape has shifted, and those invested in spot Bitcoin ETFs may not have the same access to alternative assets on-chain.

In August, Ethereum reached a record high of $4,950, and Bitcoin’s market share dropped to 54% by October. Still, only three EtherRocks have been sold in the past year, with the most recent fetching $189,000 in ETH, according to OpenSea.