Bitcoin trails as metals rise, yet this unusual divergence has preceded every significant crypto surge since 2019.

Gold and copper have experienced an upward trend even as the Federal Reserve maintains a patient stance regarding interest rate cuts. This divergence illustrates how markets often adjust to liquidity conditions in anticipation of formal policy changes, rather than waiting for affirmation from central banks.

These metals react to shifts in real yields, funding situations, and future expectations, a pattern that has frequently been observed in the earlier stages of easing cycles. Historically, Bitcoin has responded later to similar influences, with its most significant gains occurring only after metals have already adjusted for looser financial conditions.

The present situation appears reminiscent of past occurrences. Gold is drawing defensive investment as real returns on cash and Treasuries decrease, while copper is reacting to improved expectations around credit availability and global economic activity. Together, they indicate that markets are adapting to a scenario where restrictive policies are approaching their limits, irrespective of how long official statements remain cautious.

Bitcoin has not yet mirrored that shift, but historical trends indicate that it typically reacts only after the liquidity signal becomes increasingly difficult to overlook.

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Metals react before central banks intervene

Financial markets usually revalue conditions prior to policymakers recognizing a change, especially when the cost of capital begins to shift marginally.

The behavior of gold across various cycles demonstrates this point clearly. Data from LBMA pricing and analysis from the World Gold Council indicate that gold often starts to rise months ahead of the first rate cut, as investors react to peaking real yields rather than the cut itself.

In 2001, 2007, and again in 2019, gold prices increased while policy remained “officially” restrictive, reflecting expectations that holding cash would soon yield diminishing real returns.

Copper reinforces this signal further as it is influenced by a distinct set of incentives. In contrast to gold, copper demand is linked to construction, manufacturing, and investment cycles, making it responsive to credit availability and funding conditions.

When copper prices rise alongside gold, it indicates more than just defensive positioning, suggesting that markets anticipate looser financial conditions that will bolster real economic activity.

Recent movements in CME and LME copper futures confirm this trend, with prices climbing despite mixed growth data and central bank caution.

Graph showing the price of copper from Jan. 22, 2025, to Jan. 15, 2026 (Source: TradingEconomics)

This combination significantly impacts the market as it reduces the likelihood of false signals. Gold can rise due to fear or geopolitical tension alone, while copper can respond solely to supply disruptions.

However, when both metals increase simultaneously, it typically reflects a broader adjustment in liquidity expectations, which markets are willing to price in even without explicit policy backing.

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Real yields influence the cycle more than policy announcements

The primary factor driving gold, copper, and eventually Bitcoin is the real yield on long-term government debt, particularly the US 10-year Treasury Inflation-Protected Securities yield. Real yields indicate the return that investors gain after accounting for inflation and serve as the opportunity cost for holding non-yielding or low-yielding assets.

When these yields peak and start to decline, the relative attractiveness of scarce assets improves, even if policy rates remain high.

US Treasury data demonstrates that gold prices have consistently followed real yields over time, with rallies often commencing once real yields begin to decline rather than after rate cuts occur. Hawkish statements have almost never succeeded in reversing that correlation once the real return on Treasuries starts to shrink.

Copper is not as directly correlated but still reacts to the same environment, as falling real yields typically accompany easier financial conditions, a weaker dollar, and improved credit access, all of which enhance industrial demand expectations.

Graph comparing the price of gold to the real 10-year Treasury yield (inverted) from 2004 to 2026 (Source: LongtermTrends)

Bitcoin operates within this same framework but typically reacts later because its investor base tends to respond only after the liquidity shift is more evident. In 2019, Bitcoin’s rally followed a sustained decline in real yields and gained momentum as the Fed transitioned from tightening to easing.

In 2020, the relationship became more pronounced as real yields plummeted and liquidity flooded the market, with Bitcoin’s performance accelerating well after gold had already repositioned.

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This sequence explains why Bitcoin may seem disconnected during the initial phases of a cycle. It does not react to isolated data points or single-rate decisions, but rather to the cumulative impact of real-yield compression and liquidity expectations that metals tend to reflect earlier.

Graph showing the performance and 30-day correlation between Bitcoin and gold from 2017 to 2026 (Source: Newhedge)

Capital rotation clarifies Bitcoin’s delayed reaction

The order in which assets respond during easing cycles highlights how different types of capital reposition. Early in the process, investors typically lean toward assets that preserve value with reduced volatility, which bolsters demand for gold.

As expectations for easier credit and improved growth solidify, copper starts to reflect that shift through rising prices. Bitcoin generally absorbs capital later, once markets are more assured that easing will occur and that liquidity conditions will favor riskier, more reflexive assets.

This trend has been observed across cycles. In 2019, gold’s rally preceded Bitcoin’s breakout, with Bitcoin eventually outperforming once rate cuts were actualized. In 2020, the timeline was compressed, but the sequence remained consistent, with Bitcoin’s most significant gains materializing after policy and liquidity measures were already in effect.

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Because Bitcoin’s market is smaller, newer, and more sensitive to marginal flows, its movements tend to be more pronounced once positioning shifts favorably.

At present, metals seem to be revaluing conditions in advance of confirmation, while Bitcoin remains confined within a range. This divergence has often been seen in the early phases of easing cycles and has resolved only after real-yield compression has become persistent enough to influence broader capital allocation decisions.

What could invalidate the current setup

This framework relies on real yields continuing to decline. A prolonged increase in real yields would undermine the rationale for gold’s rise and weaken the case for copper, leaving Bitcoin without the liquidity support that has historically bolstered cycles.

A swift acceleration in quantitative tightening or a significant rise in the dollar would also tighten financial conditions and exert pressure on assets reliant on easing expectations.

A renewed spike in inflation that compels central banks to postpone easing significantly would present a similar risk, as it would keep real yields high and constrain the potential for liquidity expansion. While markets can anticipate policy shifts, they cannot maintain those expectations indefinitely if the underlying data turns unfavorable.

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Currently, futures markets continue to anticipate eventual easing, and Treasury real yields remain below their cycle peaks. Metals are reacting to these signals. Bitcoin has yet to follow suit, but its historical behavior indicates that it tends to respond only after the liquidity signal becomes more persistent.

If real yields keep compressing, the trajectory that metals are currently following has often led Bitcoin to follow later, and with significantly greater impact.

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