Gold and silver fall, dragging down Bitcoin The recent weakness of Bitcoin is not solely due to internal factors in the cryptocurrency market. As the Federal Reserve releases stronger policy signals and the US dollar rises, gold and silver are falling simultaneously. The "anti currency devaluation" trading that was once pursued by funds in the past two years is retreating, and Bitcoin is also dragged down. Gold, silver, and Bitcoin were previously considered scarce assets, benefiting from market concerns about fiscal expansion, rising debt, and declining purchasing power of paper currency. As a result, funds flow towards assets that cannot be freely issued. But this logic is reversing. The newly appointed Federal Reserve Chairman Kevin Warsh released a hawkish signal at the first meeting, and the market is currently anticipating two 25 basis point rate hikes each until March 2027, corresponding to a possible increase in the federal funds rate to 4.00% to 4.25%. Meanwhile, the US dollar has risen by about 0.8% this week. Higher real interest rates will increase the opportunity cost of holding interest free assets. For overseas buyers, the strengthening of the US dollar will also increase the purchase cost of gold, silver, and Bitcoin. This puts pressure on all three types of assets simultaneously. Earlier this week, gold prices fell below $4000 for the first time since November last year, silver prices have fallen more than half from their high point, and Bitcoin has fallen to around $58000. Looking at the longer range, gold has fallen about 28% from its record high of nearly $5600 in January 2025, silver has fallen more than 50% from its high of nearly $120, and Bitcoin has fallen about 50% from its high in October last year. The relationship between Bitcoin and precious metals is not entirely consistent. During most of 2025, when gold and silver continued to rise, Bitcoin was trading sideways around $100000, lagging behind precious metals. This also prompts the market to reconsider whether Bitcoin is still considered an asset to hedge against currency depreciation. But the more unfavorable point at present is that although Bitcoin did not fully keep up with precious metals during its upward phase, its downward phase is closer to its trend. However, Bitcoin is not entirely resilient compared to precious metals. Since the bottom of the relevant ratio in February this year, Bitcoin has risen by about 30% relative to gold and over 55% relative to silver. This indicates that it still possesses both the attributes of a risky asset and a "hard currency" narrative. As long as the Federal Reserve maintains a hawkish stance and the US dollar remains strong, Bitcoin may still find it difficult to escape the downward trend linked to gold and silver in the short term.