Gold and silver are not only siphoning capital from cryptocurrencies, but discussions about precious metals on social media are also increasing the interest of individual investors.
However, analysts suggest that the fear of missing out (FOMO) emerging among individual investors may indicate that the market is near its peak.
Capital and interest, movement from cryptocurrencies to metals
Earlier this week, the cryptocurrency online data platform Santiment reported that the market capitalization of the top 12 stablecoins has decreased by $2.24 billion. This decline coincides with the point at which Bitcoin (BTC) prices fell while gold and silver reached all-time highs.
The rise of safe assets and the decrease in the market capitalization of stablecoins suggest a shift in investor positions towards risk aversion. Such contraction indicates that capital is leaving the cryptocurrency ecosystem and that it is actually flowing out of the market.
โInvestors choose safety over risk. When uncertainty rises, funds move into assets recognized as a means of value storage during economic stress, investing in these assets instead of the volatile cryptocurrency market.โ โ Official post from Santiment
Typically during market corrections, investors move from digital assets to stablecoins to wait for re-entry opportunities. However, a decrease in the market capitalization of stablecoins suggests that investors are converting stablecoins to cash, indicating they are not preparing for additional purchases.
Not only capital but also investor interest is shifting. Santiment noted in a separate post on X (formerly Twitter) that retail investors' attention is becoming increasingly dispersed. The focus is shifting between cryptocurrencies and traditional assets according to short-term price fluctuations.
Throughout January, cryptocurrency SNS saw weekly changes in investor interest. In the first week of January, discussions were limited due to participants slowly returning from vacation, while the cryptocurrency market showed an upward trend.
In the second week, gold reached an all-time high, drawing attention to gold, and cryptocurrency prices also rose in tandem. In the third week, a correction in Bitcoin prices shifted the focus of online discussions to Bitcoin, and retail investors began to buy the dip. During this period, the cryptocurrency market experienced a sharp decline.
In the fourth week of January, interest shifted back to silver. Silver also hit an all-time high, and investors rushed to enter this asset. During the same period, the cryptocurrency market showed a sideways trend.
Santiment, a cryptocurrency online data platform, mentioned that cryptocurrency investors typically circulate within sectors of digital assets such as 'meme coins', AI tokens, and blue-chip assets. However, recent data shows broader behavioral changes.
โNow, retail investors are crossing across the entire sector. According to SNS data, interest is clearly focused on assets that have seen recent surges, including gold, silver, and even stocks.โ โ Santiment team
Momentum buyingโฆ concerns over silver price peaks
Meanwhile, Santiment mentioned that excessive excitement among retail investors is always a contrary signal. The FOMO phenomenon among retail investors generally appears at the tail end of a sharp rise, that is, when prices have already increased significantly. When ordinary investors jump in emotionally, it often indicates that the market is close to its peak.
โWhen retail cryptocurrency investors are swept up by FOMO, it often coincides with peaks. Today, after the price of silver surged to $117.70, the interest among retail investors peaked, and then fell below $102.70 within just 2 hours. To achieve successful trades, a strategy that moves contrary to crowd psychology is advantageous.โ
Alongside this, Benjamin Cowen, the founder of Into The Cryptoverse, also predicted that the price of silver could peak after a surge between February and May.
According to the latest data, the price of silver has risen to $113.7 per ounce, an increase of 1.3% from the previous day. Whether this precious metal will actually reach its peak in the future remains to be seen.