2025 Market Review: How did BSE Smallcap, PSEI, Bitcoin perform compared to Gold and Silver?

Synopsis: As BSE Smallcap (-11%), PSEi (-8.6%), and Bitcoin (-30% from peak) weaken in 2025, gold (+72%) and silver (+142%) surge, emerging as top-performing assets amid global uncertainty, risk-off sentiment, and safe-haven demand worldwide investor preference.

There is a clear divergence across asset classes in 2025, with BSE Smallcap (-11%), PSEi Philippines (-8.6%), and Bitcoin (-4.8%) among the weakest performers so far. Even India’s broader equity benchmarks show mixed returns, with BSE Midcap (-3.8%) lagging while Sensex (+5.2%) and Nifty (+4.0%) remain only modestly positive. This highlights pressure on riskier and mid-to-small-cap segments amid tighter financial conditions and selective risk appetite.

In contrast, precious metals have emerged as the standout winners, with Silver surging ~142% and Gold rising ~72%, far outperforming global equities. Several international indices such as DAX, FTSE 100, Nikkei, and Hang Seng have delivered strong gains, but none match the scale of the rally in metals.

The trend suggests a strong shift toward safe-haven assets, as investors seek protection against volatility, geopolitical risks, and macro uncertainty, making gold and silver key outperformers in the current market cycle.

Reason why Gold and Silver are outperforming Asset classes

Gold and silver were the leaders with regard to performing asset classes this year, with investors increasingly turning to safe havens driven by the growing uncertainties around the globe. There have been geopolitical tensions, worries about global economic expansion, as well as market volatility triggered by equities, small-caps, which drove the trend of safe-haven assets. Gold led because it has always served as a hedge against uncertainty.

Another significant factor at play here was the shift in interest rate expectations. While inflation declined and economic growth softened in various regions around the globe, investors slowly began to consider rate reductions by leading central banks. It would not have been a favorable setup for non-yielding instruments such as gold and silver. However, robust demand for gold stemming from emerging countries looking to diversify their holdings helped to establish supportive pricing structures for gold itself.

However, silver performed better because it is both a safe haven and an industrial metal. Demand from solar energy, electronics, and electrification drove silver fundamentals, while risk aversion increased investor interest. Together, uncertainty-driven flows into gold and strong industrial demand for silver helped make precious metals the best-performing asset classes this year.

Reason why the BSE Smallcap index slipped

The BSE SmallCap Index declined by in excess of 11% in dollar terms in 2025, registering the sharpest fall in three years after it jumped 47% in 2023 and 26% in 2024.

This correction came when the rupee depreciated in value, coupled with tensions in trade talks between India and the US, as well as outflows by foreign funds in 2025, which led to a strong risk-off reaction. Investor liquidity flowed to large-caps and other asset classes as well, making small-cap stocks weak even when the Sensex and Nifty notched up modest gains of 5% in 2025.

Smaller equities continue facing tough times, with almost 90% of the BSE SmallCap indices trading below their 52-week highs. About 10% of stocks are down 50-90% from their highs, with 81% showing declines of 10-50%, meaning that these equities continue struggling with a rise in global risk-off sentiments despite reaching an all-time high in large-cap indices. This trend could continue in 2026.

The cryptocurrency market’s 2025 slump has erased substantial year-to-date gains, with Bitcoin plummeting over 30% from its October peak above $126,000 to around $87,770 by late December, potentially marking its first annual loss since 2022. 

This reversal dashed Trump-inspired optimism from his reelection and early pro-crypto signals, as subsequent US-China tariffs, Fed hawkishness, and AI stock volatility triggered risk-off flights, $19 billion in liquidations, and fading ETF inflow hopes. Broader impacts rippled to crypto-linked stocks like Coinbase and Robinhood, amplifying investor caution amid high valuations and policy uncertainties.

2025 highlighted a clear risk-off shift. As small-caps and crypto corrected, investors moved toward safety. Gold and silver outperformed on uncertainty, central-bank demand, and industrial usage, reinforcing their role as preferred hedges in volatile markets.

Disclaimer

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