Silver Outperforms Bitcoin as Physical Scarcity Reshapes Global Markets

A widening divergence between silver and Bitcoin is highlighting an important macroeconomic theme: during periods of physical scarcity and rising geopolitical tension, capital is increasingly flowing into hard assets rather than digital alternatives. This shift has become more pronounced toward the end of 2025, as silver prices surged while Bitcoin struggled to attract defensive inflows.

The latest rally in silver began in China, where domestic prices reached record highs on December 25 amid signs of a physical supply shortage. Chinese spot and futures markets have consistently traded at premiums to London and COMEX benchmarks, and in some instances briefly slipped into backwardation, a classic signal of immediate supply stress. Given that China accounts for more than half of global industrial silver demand, local tightness has quickly translated into global price pressure.

Globally, spot silver has hovered near all-time highs around $72 per ounce, extending a rally that has lifted prices more than 120% in 2025. Gold has also benefited from similar dynamics, rising roughly 60% over the year as investors sought tangible stores of value. In contrast, Bitcoin ended December lower after peaking above $120,000 in October, reinforcing the perception that it has behaved more like a high-beta liquidity asset than a crisis hedge.

Industrial demand remains a major driver behind silver’s strength. Solar panel manufacturing continues to consume large volumes of the metal, while electric vehicle production is accelerating. Each EV requires significantly more silver than a traditional car, especially in power electronics, battery management systems, and charging infrastructure. Ongoing grid expansion and electronics manufacturing have further supported demand.

Geopolitical risks have added another layer of support. Rising defense spending linked to conflicts in Ukraine and the Middle East has increased silver consumption in military electronics and munitions. Unlike investment demand, much of this silver is permanently removed from circulation, tightening supply further.

As markets approach 2026, the contrast between silver and Bitcoin underscores a broader lesson. Digital scarcity alone has not consistently attracted capital during supply-driven shocks, while physical scarcity tied to energy, defense, and industrial policy continues to play a decisive role in shaping asset performance.