The same dynamic that drove investors toward NFTs and smaller coins during the pandemic-era crypto boom is currently playing out with gold and silver, according to Bitwise CIO Matt Hougan.

As the precious metals scale new heights, he told Decrypt that investors appear to be rotating profits from one asset to the other in a way that parallels previous spillovers in crypto, where investors trimmed profitable positions in search of greater gains.

“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.”



With an estimated market cap of $34 trillion, the price of gold has surged 80% over the past year, creating massive amounts of wealth on its way toward $5,000 per ounce. Meanwhile, the price of silver has increased 228%, passing $100 per ounce for the first time on Friday.

When investors feel wealthier, behavioral economics suggests that they spend more through a phenomenon known as the “wealth effect.” The same applies to markets, particularly when it comes to investors tapping digital assets smaller than Bitcoin and gold, Hougan said.

“In any bullish market, when you have that much wealth created, of course it's going to spill over,” he said. “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.”

Silver’s market cap was below $2 trillion not long ago, but the precious metal was worth an estimated $5.6 trillion on Friday, according to Companies Market Cap. Cobalt and Palladium are among other precious metals that have doubled in value over the past year.

Ethereum, Solana, and XRP are collectively valued at $453 billion. And those cryptocurrencies are more susceptible to price swings than their $1.8 trillion counterpart, Bitcoin, which currently accounts for 58% of the market, according to CoinGecko.

“In a bullish market, you make money on the main asset, and then you have this wealth effect that cascades,” Hougan said. “Eventually, they'd be buying EtherRocks, or really crazy NFTs.”

Four years ago, someone did indeed pay $843,000 worth of Ethereum for a JPEG of a rock, according to OpenSea. Although the collectible is scarce, with only 100 ever created, it unabashedly lacks the utility compared to other digital assets, let alone precious metals.

Since the crypto market bottomed out in 2022, following the collapse of prominent exchange FTX, Bitcoin’s share of the crypto market has risen steadily from 36%. That period has been marked by the debut of exchange-traded funds tracking the spot price of Bitcoin and other digital assets, allowing financial institutions to gain exposure where they couldn’t before.

Market participants have looked to Bitcoin’s share of the crypto market as a gauge for future altcoin seasons, but the crypto market has changed drastically in recent years, and those allocated to spot Bitcoin ETFs can’t necessarily reach for an alternative on-chain.

In August, Ethereum hit an all-time high of $4,950. Bitcoin’s dominance then fell to 54% in October. Still, only three EtherRocks have changed hands within the past year, with the latest NFT from the collection being sold for $189,000 worth of ETH, according to OpenSea.

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