Declining Stablecoin Capitalization Indicates Investor Preference for Precious Metals Over Bitcoin: Santiment Analysis
Since October's significant market downturn, Bitcoin has experienced a nearly 30% decline, even as precious metals gold and silver have reached unprecedented price levels.
The stablecoin market has experienced a total market capitalization decline of $2.24 billion within the past 10 days, which may indicate that investor funds are exiting the cryptocurrency sector and potentially prolonging the timeline for market recovery, based on findings from a leading crypto analytics platform.
Through a Monday announcement on X, Santiment indicated that a substantial portion of this divested capital has shifted toward conventional safe-haven investments such as gold and silver, driving these assets to record valuations, even as Bitcoin (BTC), the wider cryptocurrency sector and stablecoins have experienced significant pullbacks.
According to Santiment, "A falling stablecoin market cap shows that many investors are cashing out to fiat instead of preparing to buy dips," with the firm further noting that the increasing appetite for gold and silver indicates "investors are choosing safety over risk."
"When uncertainty rises, money often flows into assets that are seen as stores of value during economic stress, rather than volatile markets like crypto."
Precious metals gold and silver surpass Bitcoin performance in recent period
Throughout 2025, Bitcoin maintained strong performance momentum until Oct. 10, 2025, at which point the cryptocurrency ecosystem witnessed the liquidation of leveraged crypto positions valued at more than $19 billion, causing Bitcoin's price to plummet from approximately $121,500 to a level beneath $103,000 within just 24 hours.
In the period following that event, Bitcoin has continued its descent to $88,080, whereas gold has experienced a surge exceeding 20% to surpass the $5,000 threshold, and silver has witnessed its market valuation more than double.
Among the most significant gold purchasers in recent months has been Tether, the stablecoin issuing company, which acquired 27 metric tons valued at $4.4 billion during the fourth quarter of 2025 exclusively.
Increased stablecoin supply may indicate approaching market recovery
According to Santiment's analysis, a revival in the crypto market may require stablecoin expansion to occur initially:
"Historically, strong crypto recoveries tend to start when stablecoin market caps stop falling and begin to rise again. That would signal fresh capital entering the ecosystem and renewed confidence from investors."
In the absence of such stablecoin market capitalization growth, alternative cryptocurrencies with smaller market caps and higher risk profiles — commonly referred to as altcoins — are expected to continue experiencing substantially greater negative impacts compared to Bitcoin.
Santiment further explained that "Bitcoin often holds up better than altcoins in these environments, but reduced stablecoin supply still limits upside across the market."