Bitcoin's comparative performance against gold remains a focal point of discussion within financial and crypto circles as gold recently achieved a milestone by breaking above the $5,000 mark. Despite this ascent, Bitcoin has not mirrored a similar surge, trading below the $90,000 threshold. This divergence has led analysts to reassess Bitcoin's valuation, particularly through the lens of its price relative to gold rather than solely in U.S. dollar terms.
Mark Moss, the Chief Bitcoin Strategist at Satsuma, underscores that Bitcoin appears undervalued when measured against gold. He highlights a recurring pattern where Bitcoin tends to revert to its 200-week moving average relative to gold approximately every four years, a timeframe historically associated with compelling accumulation opportunities. While short-term downside risks cannot be dismissed, these cyclical phases have proven to be potential entry points for investors aiming for long-term gains.
Complementing this perspective, the macroeconomic analyst known as Capital Flows emphasizes that current macro liquidity conditions and capital flow data lend further support to the idea that Bitcoin is currently undervalued. According to this analysis, capital is no longer significantly favoring gold over Bitcoin, with overall positioning in the market hovering around neutral. This neutral stance suggests that comparatively minor positive developments—such as enhanced regulatory clarity or modifications in expectations surrounding interest rate cuts—could precipitate a disproportionately strong upward movement in Bitcoin's price.
Furthermore, Capital Flows points to the potential unleashed by regulatory progress regarding tokenization and stablecoin frameworks. The successful advancement of these areas could catalyze the largest inflow of capital into the cryptocurrency sector to date, an effect possibly amplified by the presence of a crypto-positive administration.
Market traders also observe notable data reinforcing Bitcoin's relative status. Michael van de Poppe, a trader with a pronounced focus on cryptocurrency trends, states that the Bitcoin-to-gold ratio is presently at historic extremes, marked by a wider divergence than previously recorded when compared to estimated fair values. Specifically, the two-week Relative Strength Index (RSI), a momentum oscillator used to identify overbought or oversold conditions, has reached its lowest point on record for this ratio, dipping below levels seen during the 2018 and 2022 bear markets.
This technical viewpoint suggests that familiar pricing models based exclusively on U.S. dollar valuation may not fully capture Bitcoin's undervaluation when juxtaposed with gold, a perception strengthened by data indicating gold's current price appears elevated.
Supporting these observations, trader Niels notes that Bitcoin has already depreciated by approximately 60% against gold, signaling that it may be nearing the conclusion of its price decline relative to the precious metal. He projects that Bitcoin could enter a consolidation phase lasting four to six months before embarking on a renewed upward trend.
Over the past month, these price dynamics are evident with gold's value advancing roughly 12%, in stark contrast to Bitcoin, which has remained largely unchanged in dollar terms, experiencing a marginal 0.06% increase despite briefly touching near $97,000 earlier in the same period.
This juxtaposition of performance between the two assets raises important considerations for investors evaluating long-term allocation strategies in environments marked by fluctuating macroeconomic factors and shifting regulatory landscapes. The interplay of technical indicators, macro liquidity trends, and policy developments provides a multifaceted context for assessing Bitcoin's relative valuation and prospective trajectory.
Key Points
- Bitcoin is trading below $90,000 and appears undervalued when assessed relative to gold, which recently surpassed $5,000.
- Bitcoin historically revisits its 200-week moving average against gold approximately every four years, highlighting potential accumulation periods.
- Macro liquidity and capital flow data indicate neutral positioning, suggesting minor catalysts could trigger significant price appreciation for Bitcoin.
- Advancements in tokenization and stablecoin regulation under a crypto-supportive administration might drive substantial new capital into cryptocurrencies.
Risks and Uncertainties
- Short-term downside risk remains for Bitcoin despite its attractive valuation metrics against gold.
- Market positioning is currently neutral, implying the absence of a clear directional bias and potential for volatility.
- Regulatory developments are uncertain and could either catalyze or hamper Bitcoin's capital inflows.
- The consolidation phase anticipated by some traders might result in extended periods of price stagnation before any potential uptrend materializes.