Bitcoin (BTC) fell to $86,000 on Sunday as global markets adopted a defensive stance, despite a weakening U.S. dollar due to concerns over currency intervention and stress in the bond market in Japan. This scenario defies the prevailing notion that a falling dollar inherently boosts Bitcoin; instead, capital has been directed toward gold and silver.

The divide in investor behavior signifies where capital is being safeguarded amidst current uncertainties, suggesting that BTC is behaving more like a risk asset rather than a hedge against fiat currency instability.

The Weak Dollar and its Consequences on Bitcoin

Market analysts have noted that the recent drop in the dollar’s value has not resulted in a surge for Bitcoin. On the contrary, funds have decisively gravitated toward traditional safe havens. In a recent analysis, GugaOnChain from CryptoQuant suggested that dollar weakness benefits Bitcoin only in certain circumstances such as high inflation or relaxed liquidity. However, in conditions where fear reigns and capital preservation is paramount, investors favor established assets as stores of value.

This shift could be explained by the dollar’s current softness, which is linked to speculation around Japanese yen intervention and broader geopolitical issues, including renewed U.S. tariff threats against Europe.

“If the devaluation stems from a crisis of confidence and extreme risk aversion – as now, with the dollar weakening on rumors of yen intervention – cryptos tend to fall alongside stocks,” the analyst wrote.

In these trying times, investors are looking for dependable stores of value.

“People are not chasing returns; they are protecting purchasing power because confidence elsewhere is dying fast,” posted market observer Daniel Tschinkel.

His observations reflect the significant demand for physical gold in some Asian markets, where it is trading at high premiums, indicating a robust genuine need beyond just speculative interests.

Gold and Silver See Increased Interest as Bitcoin Fades

The net inflow into precious metals has been remarkable. Currently, gold’s market capitalization has reached a staggering $35 trillion, while silver’s has hit $6 trillion, as reported by The Kobeissi Letter.

This surge accompanies a noticeable exodus from cryptocurrency investments. Lookonchain, a firm specializing in on-chain analytics, highlighted that an anonymous investor, having incurred a loss of $18.8 million on Ethereum (ETH) over a two-week span, has since invested over $36 million to acquire a gold-backed token.

The performance discrepancy is also significant. A $100,000 investment made a year ago would now amount to $180,000 in gold and $342,000 in silver, while only netting $85,900 in BTC.

Trader Ted Pillows has also mentioned that Bitcoin has depreciated by 56% compared to gold since December 2024, with the monthly relative strength index for this pairing at its lowest level ever.

Overall, the prevailing conditions indicate that until the macroeconomic fears prompting investors toward physical metals dissolve, Bitcoin’s status as a digital safe haven will face substantial scrutiny.

As GugaOnChain pointed out:

“For BTC to thrive, the weakness of the American currency must come from risk appetite, not from fear.”