Global Asset Rebalancing in Progress: While Bitcoin Faces Pressure Against the US Dollar, Precious Metals Are Making a Comeback

A clear turning point has recently appeared in the global financial markets. Elon Musk’s latest statement pointed out that the US$38 trillion debt has already reached a dangerous level. Following his remarks, the market experienced a significant correction.

Chain Reaction in the Crypto Market

Bitcoin led the decline in this adjustment. It retreated from its high to around US$91,170 (24-hour change +1.12%), with 190,000 trading accounts liquidated in a single day, involving over US$500 million. Since the October peak, Bitcoin has fallen more than 30% against the US dollar, essentially giving back all its gains this year. Ethereum performed slightly better, now priced at US$3,130 (24-hour +0.46%), but overall downward pressure remains. Zcash (ZEC) is currently at US$505.64 (24-hour +0.07%).

The underlying logic behind this decline is worth noting: concentrated liquidations of high-leverage positions triggered a domino effect of falling prices. Once the funding chain tightens, liquidations accelerate automatically.

Rotation Between Risk Assets and Safe-Haven Assets

More thought-provoking is the shift in asset allocation. While the crypto market faces pressure, the precious metals market shows remarkable resilience. Silver and platinum have gained nearly 180% year-to-date, and gold has broken through a historic high of US$4,400. This is not just simple risk aversion but reflects changes in the global liquidity environment.

As funds flee risk assets, they are seeking genuine hard assets for refuge. Precious metals, energy commodities, and other tangible assets are beginning to regain favor.

The Warning Lights of the Tech Bubble Are Already On

Meanwhile, warnings are coming from the tech sector. Nvidia’s market cap evaporated nearly one trillion dollars in two days, and chip-related stocks like Oracle and Broadcom also declined in tandem. Goldman Sachs recently released a blunt report: debt among tech companies has surged 300% over three years, and AI has become a true “money-burning machine.”

This indicates that the recent surge in tech stocks over the past two years was partly built on an extremely loose financing environment. Once borrowing costs rise and liquidity tightens, the entire chain will reveal its fragility.

Inflationary Pressures Resurface

Pressure is also transmitting from raw materials. Prices of key materials like battery-grade lithium carbonate and cobalt lithium continue to rise, and automakers and battery manufacturers are passing costs downstream. The spark of inflation has not been fully extinguished; in some segments, it is reigniting.

Similarities and Differences in History

All of this indeed reminds us of the scenes before and after 2008: high leverage combined with asset bubbles, sudden liquidity tightening, and chain reactions of asset declines. But this round’s risk points are more dispersed, with potential bombs hidden in the crypto market, tech stock valuations, and government debt books across countries.

One of Musk’s insights is worth pondering: the concept of future currency may fade, and energy and tangible assets will become the true anchors of value. To some extent, this explains why precious metals and commodities are performing strongly in the current environment.

Current Response Strategies

In facing this market landscape, several principles may need to be re-evaluated:

First, control leverage risk. High-multiplier operations in derivatives markets are extremely risky in such volatile conditions; timely stop-loss and risk management are crucial.

Second, assess the quality of holdings. Overvalued AI-related tokens, altcoins, and similar assets require re-evaluation of their risk-reward ratio; appropriate position adjustments are necessary.

Third, allocate tangible assets. In extreme risk scenarios, moderate allocation to assets related to precious metals may serve as a hedge.

Fourth, maintain sufficient liquidity. Having ample dry powder allows capturing opportunities when extreme market moves occur.

Overall, the global asset rebalancing cycle seems to have begun. The pressure on Bitcoin against the dollar, the rise of precious metals, and the divergence in tech stocks are different facets of the same macro story. History may not repeat exactly, but the rhythm and form of this cycle are indeed worth every market participant’s serious attention.