Gold, Silver and Bitcoin Tumble as Fed Rate-Hike Expectations Build
Gold, silver and Bitcoin benefited in 2025 from the “debasement trade,” which investors used to hedge against declining purchasing power in fiat currencies. Markets are now betting that the U.S. Federal Reserve will pivot to raising rates. Higher rates increase the opportunity cost of holding non-yielding precious metals and challenge the safe-haven narrative surrounding crypto assets.
The latest wave of selling pushed gold below $4,000 an ounce, while silver fell more than 50% from its 2025 peak and Bitcoin also declined. Markets now expect the Fed, under a new chair, could raise rates twice by March 2027, prompting investors to pull money from assets previously favored on expectations of currency debasement.
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The history behind this eventBitcoin and Precious Metals Tumble as Rising Inflation Fuels Rate-Hike Expectations
The annual increase in the U.S. consumer price index rose to 4.2% in May, topping the 4% threshold. Markets responded by reassessing the Federal Reserve's scope to cut rates in the second half of the year and raising expectations of rate hikes. Higher interest rates increase the opportunity cost of holding non-yielding assets, putting Bitcoin, gold and silver under pressure.
Safe-haven and crypto assets faced a selloff after the latest inflation data, with Bitcoin falling below $62,000 and gold and silver prices also tumbling. Attention has shifted to the Federal Reserve's next interest-rate decisions. If the rise in May's 4.2% annual CPI reading persists, monetary policy could remain hawkish in the second half, prompting more conservative capital allocation.
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