Silver markets delivered a striking message this Christmas, marking a notable contrast with Bitcoin’s subdued performance during the holiday period. While Bitcoin experienced minimal trading activity amid thin liquidity, silver prices in China skyrocketed to unprecedented local levels, propelled by tight physical supply and robust industrial demand. This divergence underscores a significant macroeconomic trend: in times of scarcity and geopolitical tension, investors increasingly gravitate toward hard assets rather than digital alternatives.
The recent surge in silver prices can be traced back to China, where local prices hit a record high of $80 per ounce on December 25, reflecting a staggering increase of over 150% year-to-date. Reports indicate that China is grappling with a severe shortage of physical silver, causing a ripple effect in the global marketplace. Currently, spot silver prices hover near recent all-time highs of around $72 per ounce, continuing a remarkable rally that has seen prices rise more than 120% in 2025. In contrast, gold has also fared well this year with a rise of approximately 60%, while Bitcoin has faltered, ending December on a downward trend after peaking above $120,000 in October.
The discrepancy between Chinese silver prices and global benchmarks is noteworthy, as the Chinese spot and futures markets have consistently traded at premiums compared to London and COMEX prices. In certain instances, contracts have entered backwardation, signaling immediate supply strains. Given that China constitutes over half of the global industrial silver demand, local shortages present a significant challenge on the world stage.
Multiple factors are contributing to this pressure on silver supply. The solar manufacturing sector remains the foremost driver of demand, complemented by an uptick in electric vehicle (EV) production, which requires a considerably higher amount of silver per vehicle compared to traditional cars. This is particularly true in areas like power electronics and charging infrastructure. Additionally, the demand for silver has been bolstered by expansions in grid infrastructure and electronics production.
In stark contrast to these developments, Bitcoin displayed little to no reaction on Christmas Day. The cryptocurrency’s prices moved sideways, largely indicative of reduced institutional involvement rather than any fundamental shift. This stagnation is further emphasized by the noticeable absence of defensive inflows, signaling a lack of appetite for digital assets in the current market climate.
As 2025 drew to a close, Bitcoin’s behavior contrasted sharply with that of silver, which has increasingly been viewed as a crisis hedge rather than a high-beta liquidity asset. When narratives focus on physical scarcity and supply-chain disruptions, investors have shown a clear preference for metals over digital alternatives.
Geopolitical tensions further reinforce this trend. Increases in defense spending, particularly in relation to ongoing conflicts in Ukraine and the Middle East, have heightened demand for silver used in military electronics and munitions. Notably, much of this silver is permanently consumed, underscoring the ongoing pressure on supply.
The ongoing divergence between silver and Bitcoin underscores a broader macroeconomic lesson: digital scarcity alone may not be sufficient to attract capital during supply-driven crises. Physical scarcity, especially when intertwined with issues surrounding energy, defense, and industrial policy, continues to play a pivotal role. As markets transition into 2026, this distinction may significantly influence asset performance, moving beyond simple narratives of risk appetite.
