Recently, there have been many opinions suggesting that once precious metals (gold, silver) plunge from high levels, funds will flow into cryptocurrencies. It sounds logical, but upon closer inspection, there are some issues.

In fact, the relationship between these two markets is not so simple. When precious metals rise, cryptocurrencies often fall — this is indeed common because funds seek returns, and when one sector heats up, money flows into it. But what about the other way around? When precious metals crash, do cryptocurrencies necessarily rise? Not necessarily.

A more realistic scenario is that when both precious metals and cryptocurrencies decline simultaneously, it often indicates that the market is in a state of collective panic. At this point, it’s not a matter of where the funds are going, but rather that risk assets are being sold off across the board. Investors are fleeing both gold and coins. A decline in precious metals, seen as safe-haven assets, usually signals a collapse in market confidence — at this time, high-risk assets like cryptocurrencies naturally cannot escape either.

Therefore, instead of expecting that a sharp drop in precious metals can save the crypto market, it’s better to understand that these two markets reflect investors’ risk preferences and market sentiment at different stages. True opportunities often arise after emotional recovery.