Why is Bitcoin underperforming precious metals? Pompliano reveals market structure and demand changes

January 27 News, recently gold and silver prices have continuously hit new highs, while Bitcoin has been oscillating in the $84,000 to $94,000 range since mid-November last year, performing significantly behind. Anthony Pompliano posted a video analysis on X platform pointing out that this gap is due to market demand, structural changes, and competition for risk capital and attention, rather than a single factor.

Pompliano noted that precious metals performed remarkably over the past year: gold rose about 80%, silver increased 250%, copper up 40%, and platinum nearly 200%, while Bitcoin declined 16% during the same period. He believes that the rise in precious metals reflects demand driven by different sources. Gold benefits from central banks worldwide continuously stockpiling reserves and capital flows shifting into the precious metals market amid global economic restructuring; silver is mainly driven by industrial demand, such as defense equipment, artificial intelligence hardware, and electric vehicle production; copper and platinum are more affected by electrification and supply constraints, forming a market structure favorable to holders. Pompliano states that this is a typical example of recent “precious metals rotation,” with gold leading, silver following closely, and then copper and platinum.

In contrast, Bitcoin has not kept pace with this rally, affected by structural and market mechanism changes. Pompliano explains that Bitcoin’s “IPO moment” is underway, with long-term holders gradually transferring Bitcoin to institutional investors, thereby changing the way holdings and trading are conducted. Additionally, the surge in financial instruments has made shorting Bitcoin more convenient, with market volatility decreasing from around 80 to 40. This means that Bitcoin’s extreme upward and downward phases have reduced, making it more like an asset with smaller fluctuations.

Pompliano also points out that narrative factors related to market demand are at play. Bitcoin was once seen as a “chaos hedge,” but recent global geopolitical stability has reduced investors’ perception of this insurance demand. Meanwhile, central banks in various countries use gold to express hedging preferences, which weakens Bitcoin’s attractiveness. Falling inflation expectations are also a factor; Trueflation data shows that inflation has decreased from 2.7% 90 days ago to 1.2%, reducing investors’ interest in Bitcoin as an inflation hedge.

Furthermore, Pompliano emphasizes that Bitcoin faces fierce competition for attention and risk capital. Investment opportunities like AI stocks, prediction markets, and sports betting have attracted some young investors, diminishing Bitcoin’s status as the default choice. He believes that Bitcoin trading is turning into a “waiting game,” requiring holders to have patience and a long-term perspective rather than pursuing short-term gains.

Despite this, Pompliano remains optimistic about Bitcoin’s future potential. He believes that the current price of around $87,000 is more attractive than the previous $126,000, but warns investors to be aware of reduced volatility and increased institutional participation. He points out that Bitcoin is entering a stage that requires a different mindset, where patience and long-term holding will be key to success.