Bitcoin falls below $89,000 amid precious metal crash, market turmoil worsens

Bitcoin fell below $89,000 on Tuesday, entering a critical decline phase. This was triggered by investor risk aversion amid the collapse of the Japanese government bond market and the strengthening of threats by U.S. President Donald Trump to impose tariffs on Europe. Interestingly, while cryptocurrencies are declining, traditional safe-haven assets like gold and silver are surging sharply, contrary to the plunge in precious metals. This phenomenon symbolizes a fundamental shift in market participants’ asset allocation strategies.

Gold and Silver Surge, Accelerating Dollar Defense and Risk Aversion

In Tuesday’s market, rather than a collapse of precious metals, a rapid increase in metals was prominent. Gold rose over 3% in the past 24 hours, surpassing $4,750. Silver also exceeded $95 per ounce, showing a sharp rally of over 7%. This strengthening of precious metals is an extension of recent months’ trend, reflecting increased hedging demand against geopolitical tensions and U.S. fiscal uncertainty.

James Harris, CEO of Tesseract Group, pointed out, “The strength of gold is understandable given the current macroeconomic environment.” Ongoing geopolitical tensions, U.S. fiscal uncertainty, and strong central bank support are further reinforcing gold’s role as a defensive hedge.

Meanwhile, Bitcoin is taking a different path. Latest data shows BTC trading around $88,340, down 1.04% in the past 24 hours. Ethereum is also in a tough situation, trading near $2,960, with a 1.71% decline over 24 hours. This contrasting movement suggests that while cryptocurrencies are recognized as risk assets, there is an accelerating flow of funds into traditional safe assets like gold and silver.

Decline in Bitcoin and Crypto Assets, Continued Liquidation Pressure

The downward pressure on the crypto market has reached significant levels. Since last Monday, the total liquidation of long positions has exceeded $1 billion. On Tuesday alone, $486 million of long positions were liquidated, making it the second-largest daily liquidation after $637 million on Monday. This marks the worst two-day consecutive liquidation record of the year.

In the derivatives market, traders are adopting strategies to avoid declines by acquiring short positions rather than selling spot holdings. Bitcoin’s open interest increased from $28.5 billion to $29.3 billion during the sell-off. Conversely, Ethereum showed a different pattern, with large trading volumes accompanying a 6% price drop over 24 hours, and open interest decreasing even more. This indicates that price fluctuations are mainly driven by spot trading.

The privacy coin sector also took a heavy hit. Monero (XMR) dropped 11.6%, Dash (DASH) fell 9.94%, and Zcash (ZEC) declined 7%. Solana (SOL) also fell sharply to $123.83 from its previous peak.

Crypto-related company stocks also declined in tandem, with Coinbase down 5.5%, Circle down 7.5%, and MicroStrategy (MSTR), a major Bitcoin holder, down 7.8%.

Macro Environment and Geopolitical Risks Pressuring the Entire Market

The current market turmoil is driven by multiple interacting macroeconomic factors. Concerns about the collapse of the Japanese government bond market spilling over into the U.S. Treasury market have significantly worsened investor sentiment. According to analysts at Deutsche Bank, Europe holds $8 trillion in U.S. bonds and stocks, more than twice the combined holdings of other regions. In an environment where geopolitical stability among Western allies is fundamentally shaken, European investors are increasingly reluctant to play an active role.

In fact, Denmark’s pension fund AkademikerPension, which manages $25 billion in assets as of the end of 2025, held only $10 million in U.S. securities. Its Chief Investment Officer, Anders Schelde, stated, “The U.S. is essentially not of good credit, and in the long run, the U.S. government’s fiscal situation is unsustainable,” adding, “We decided to find alternative options.”

The threat of tariffs on Europe by President Trump is also amplifying market chaos. During a White House press conference, the President presented numerous economic statistics, but some of these figures have been criticized for inaccuracies. The rising uncertainty is accelerating investor risk-avoidance behavior.

Precious Metals Strengthening as a Signal, Rethinking Traditional Safe Assets

The rapid surge in precious metals is not just a price increase but a fundamental shift in market psychology. While Bitcoin has traditionally been positioned as a digital version of gold, in the current environment, it is being traded more as a high-beta risk asset rather than a macro hedge.

As Peter Schiff pointed out, “What’s happening with silver is also happening with Bitcoin, but in the opposite direction.” The astonishing rise in silver prices is a clear signal that investors are shifting toward more traditional and highly liquid safe assets.

Nine years ago, when gold was at $1,400, investors who predicted the collapse of the Japanese government bond market were called “pathetic,” but now gold exceeds $4,700, and the Japanese bond market is indeed facing a crisis. This historic development proves that signals to invest in precious metals are not mere speculation but reflect real macroeconomic risks.

Among market analysts, the consensus is that Bitcoin remains in a bearish range, down about 30% from its October peak, struggling to break through the critical resistance around $89,000. Future developments will likely depend on macroeconomic improvements and a recovery in risk appetite, which could reshape the relationship between the crypto market and precious metals.