Precious metals have dropped sharply from their 2025 highs as expectations of tighter Federal Reserve policy build.

Gold and silver have both broken below key psychological levels after peaking in January. Gold has slid about 28% from its high near $5,600 and now trades under $4,000 per ounce, while silver has plunged more than 50%, falling below $59.

The decline is being driven largely by a more hawkish outlook under Federal Reserve Chair Kevin Warsh. Markets are now pricing in two 25-basis-point rate hikes by March 2027, which would push the federal funds rate to around 4.00%–4.25% amid persistent inflation concerns.

This marks a clear shift from 2025’s dominant “debasement trade” narrative—the idea that rising deficits and government debt would steadily erode the value of fiat currencies.

Bitcoin, meanwhile, showed limited upside for much of 2025, hovering near $100,000 even as gold and silver surged. That divergence raised questions about whether bitcoin still fits the debasement trade or if its role as a hedge against currency dilution has weakened.

As the broader sell-off unfolded, bitcoin also moved lower. It is currently trading below $62,000—around 50% off its October peak—and has dropped beneath its long-term 200-week moving average near $62,800.

One encouraging sign for bitcoin bulls is its relative performance. Since February, it has gained roughly 30% against gold and more than 55% versus silver.

Even so, all three assets have underperformed U.S. equities in 2026, where gains have been concentrated in semiconductor and memory-related stocks.