As precious metals sprint higher, one Bitwise executive says the market behavior looks a lot like a crypto “altcoin season” — and the mechanics behind it should sound familiar to anyone who lived through the pandemic-era crypto boom. Bitwise CIO Matt Hougan told Decrypt that the same rotation of profits that pushed investors into NFTs and smaller-cap coins is now playing out between gold and its smaller cousins, especially silver. “What you’re seeing in these other metals like silver is just a classic altcoin cycle in metals,” Hougan said. “They made money in gold, now they’re going out the curve.” Why it’s happening Gold has been the big winner: with an estimated market cap of about $34 trillion, its price has jumped roughly 80% over the past year — Hougan and others say some expect it to march toward $5,000 per ounce. As gold rallies, investors who are sitting on big gains look to redeploy profits into higher-upside plays. That’s where silver — which is far smaller in market capitalization and more volatile — comes in. Silver has exploded, rising roughly 228% year-over-year and topping $100 per ounce for the first time recently. Silver’s market cap, which was below $2 trillion not long ago, was estimated at about $5.6 trillion on Friday, per Companies Market Cap. Other industrial precious metals — notably cobalt and palladium — have also roughly doubled over the same period. The “wealth effect” — a behavioral finance staple — helps explain the flow. When investors feel wealthier after big gains in a primary asset, they tend to take more risk and chase outsized returns in smaller markets. “If you have a $15 trillion wealth event spill over into a $2 trillion market, the price goes parabolic, and then it spills over to what's next,” Hougan said. Crypto parallels and limits Hougan draws a direct parallel to crypto: in bullish cycles, money often moves from Bitcoin (the market’s “gold”) into altcoins, NFTs and other speculative assets. The scale helps explain the moves: Bitcoin’s market cap sits around $1.8 trillion, accounting for roughly 58% of the crypto market today, according to CoinGecko. By contrast, Ethereum, Solana and XRP together are valued at about $453 billion — making them inherently more susceptible to rapid price swings. But the dynamics are not identical. Since the 2022 market bottom after the collapse of FTX, Bitcoin’s share of the crypto market rose from around 36% to higher levels, partly driven by the introduction of spot Bitcoin exchange-traded funds. Those ETFs have opened institutional exposure to Bitcoin in ways on-chain markets can’t necessarily match, meaning flows into spot ETFs aren’t always available to push into on-chain altcoins in the same way retail gains used to. Cultural echo: NFTs and nostalgia Hougan also pointed to the cultural side of cycles: once investors win on the “main” asset, they chase novelty. “Eventually, they'd be buying EtherRocks, or really crazy NFTs,” he said — a nod to crypto’s own eccentric collectibles market. Four years ago, one EtherRock sold for the crypto-equivalent of $843,000, and while scarcity remains, trading has slowed: only three EtherRocks changed hands in the past year, the most recent sale fetching about $189,000 in ETH, according to OpenSea. What to watch The metals rally is creating wealth at scale, and much like crypto’s hot streaks, the most interesting moves can happen when money rotates into smaller, more volatile markets. For crypto investors, the episode underscores how cross-asset behavior, investor psychology and new institutional products (like spot ETFs) can all reshape where and how gains are redeployed — whether that’s into silver, cobalt, altcoins, or NFTs. Read more AI-generated news on: undefined/news

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