Silver Overtakes Bitcoin on Volatility as Year-End Trading Thins
At the close of the year, silver and bitcoin have shown diverging volatility trends. Silver's realized volatility is in the mid-50s range, surpassing bitcoin's 30-day realized volatility of about 45%, which is below its 365-day average of 48%.
Silver's price has surged approximately 151% year-to-date, while bitcoin has declined roughly 7% from its October record high. The increase in silver's volatility is attributed to physical tightness in the market, wider premiums, and rising demand driven by sectors such as solar, electric vehicles, electronics, and battery technology. Additionally, China is set to begin export licensing on silver starting January 1, further tightening supply.
The London forward curve for silver has moved into steep backwardation, indicating immediate scarcity, and prices in Shanghai and Dubai trade $10 to $14 above COMEX levels. In contrast, bitcoin currently trades about 30% below its October peak, which exceeded $126,000, with traders attributing the slump to fading spot ETF demand and shifts in momentum and narrative cycles.
QCP Capital explains that much of the price action reflects mechanical forces typical during periods of reduced liquidity around holidays, noting that approximately 50% of open interest was rolled off after expiry and a large options expiry has reset dealer positioning. Market bets suggest high confidence in silver's price remaining elevated. Polymarket data shows bitcoin's probabilities with about a 70% chance of staying above $86,000 into early January and less than a 25% chance of breaking above $92,000.
Overall, traders are increasingly routing macro risk through metals rather than cryptocurrencies as year-end liquidity thins, highlighting a divergence in volatility dynamics between silver and bitcoin.
