Gold and silver are outperforming major assets heading into the Federal Reserve’s December 10 policy meeting, driven by rising concerns that the central bank may cut rates before inflation is fully contained. The shift has widened a performance gap between traditional safe havens and Bitcoin, which continues to consolidate following its October liquidation shock.
Silver is up roughly 86% year-to-date and gold has gained 60%, according to industry data. In contrast, Bitcoin is slightly negative on the year as investors reassess macro risks and unwind leverage built during its early-cycle rally. Market participants say the move reflects a defensive rotation into hard assets amid lingering inflation pressures and uncertainty surrounding the Fed’s next steps.
Ryan McMillin, chief investment officer at Merkle Tree Capital, said investors are increasingly hedging against a potential Fed policy error. That scenario would involve easing policy while inflation remains stuck above the central bank’s 2% target, a risk underscored by Core PCE readings that have drifted back toward 3% on an annualized basis. He noted that services and housing inflation remain persistent, complicating the Fed’s path forward.
Bitcoin Lags as Risk Assets Diverge
The broad reallocation has produced a divergence across asset classes. While metals have surged, US equities continue a strong year supported by earnings momentum, corporate buybacks, and sustained investment in artificial intelligence. The Nasdaq and S&P 500 have climbed 21% and 16%, respectively, suggesting institutional investors still view large-cap equities as relatively insulated from macro turbulence.
Bitcoin’s underperformance, meanwhile, follows the October 10 liquidation event that triggered a significant de-leveraging across derivatives markets. McMillin described the digital asset’s current trajectory as a mid-cycle repair phase, contrasting it with equities, which he said appear to be in a late-cycle melt-up.
On-chain indicators echo the consolidation trend. The total supply held at a loss has increased, pointing to capitulation among short-term holders and a reset typical of cyclical corrections rather than full-scale bear markets. Bitcoin has stabilized near its true market mean, a cost-basis measure that often marks the boundary between shallow weakness and deeper declines.
Analysts at Glassnode warn that Bitcoin’s sensitivity to macro data will likely remain elevated unless the asset can reclaim the 0.85 quantile, or roughly $106,200. For now, Bitcoin continues to trade in a tight range between $82,000 and $94,000, reflecting cautious order books and limited directional conviction ahead of the Fed decision.
McMillin expects Bitcoin’s disconnect from metals and equities to be temporary, arguing that the asset should eventually track global liquidity conditions once market structure normalizes. Still, in the near term, precious metals appear better positioned to benefit from inflation uncertainty and central bank ambiguity.
