Market tensions escalated on January 29, following a massive liquidation that wiped out billions of dollars in asset classes. The sell-off hit both gold and cryptocurrencies, triggering a visible capital movement into Bitcoin and other risk markets.
Bitcoin [BTC]the world’s largest cryptocurrency by market value, fell to around $81,000, a level last seen in April 2025, reducing its market capitalization to around $1.64 trillion.
However, gold suffered a heavier blow. During the same period, nearly $1.60 trillion was wiped off its market value, a loss approaching the size of Bitcoin’s entire market capitalization.
Still, analysts argue that the broader setup could ultimately work out in Bitcoin’s favor, with growing expectations that capital rotation could define the next phase of the market.
Early signals point to a rotation from gold to Bitcoin
João Pedro, market analyst and founder of Alphractal, had noted the possibility of a rotation weeks earlier.
In an earlier post, he noted that gold was approaching a “buying climax,” a phase that is often followed by a liquidation event and temporary weakness in Bitcoin. That series has since unfolded almost exactly as expected.
According to João, gold’s recent rise reflected an influx of late buyers, which helped boost momentum. Historically, this phase has tended to revive “optimism and complacency” before transitioning into sideways price action; the area where gold can now enter.
“As liquidity gradually disappears from gold, the likelihood of capital turning into risky assets increases.”
For many investors, major cryptocurrencies remain the prime risk assets of choice, with Bitcoin firmly at the center of liquidity and market attention.
Source: TradingView
João’s view is shared by Henrik Zeberg, chief macroeconomist at Swissblock, who believes the BTC-gold ratio may be setting a long-term bottom.
“Big bottom for the BTC-GOLD ratio imo. Let the rotation begin.”
While there is no definitive timeline for how long this transition could last, the broader implication points toward renewed capital inflows into Bitcoin.
João reinforced this view by saying:
“Historically, this phase unfolds over several months and appears to closely align with the historical fractal that Bitcoin has followed through its cycles – the window in which large institutional capital is aggressively reallocated into Bitcoin.”
Bullish conditions are starting to set in for Bitcoin
Bull market sentiment is gradually increasing, according to André Dragosch, European head of research at Bitwise, who believes the continued strength of precious metals could ultimately support a renewed Bitcoin rally.
Dragosch links these prospects to reflation, a phase characterized by policies aimed at stimulating economic activity. He argues that the absence of such macroeconomic tailwinds has slowed risk appetite, but has not taken away from Bitcoin’s long-term appeal.
Despite challenging macro conditions, he points out that Bitcoin exchange-traded products (ETPs) and corporate bonds have increased exposure by about 4.2 times, underscoring growing institutional conviction.
Source: Bitwise
He adds that several catalysts could drive the next leg higher, including trends in the ISM Manufacturing Index, the appointment of a new Federal Reserve chairman, increased capital deployment by major US wirehouses into Bitcoin ETFs, and more companies adopting Bitcoin treasury strategies.
Commenting on the relative valuation, Dragosch noted:
“BTC-Gold is severely underpriced and oversold any way you look at it,” adding that “this relative performance between BTC/Gold tends to move with global risk appetite.”
He emphasized that Bitcoin has historically performed best in risky environments and difficulties when investors retreat to defensive positioning.
Dragosch also highlighted a recurring market pattern: Gold typically moves first and leads Bitcoin by four to seven months, after which Bitcoin tends to outperform on a percentage basis.
Short-term weakness is testing key technical levels
Bitcoin has fallen below its two-year simple moving average (SMA), a level that previously acted as a critical support zone.
Holding the stock below this threshold could expose it to further downside pressure if bearish momentum continues.
However, history suggests that this phase has often laid the foundation for major rallies. In previous cycles, dips below the two-year SMA have coincided with extended accumulation by long-term investors ahead of broader bull markets.
Source: Alpharactal
This is consistent with the prevailing narrative of a gradual capital rotation from gold to Bitcoin, where large institutions and their clients can quietly build positions before a renewed rally, again without a precise timeline.
Final thoughts
- Bitcoin will benefit as capital continues to rotate out of gold into risky assets, although there is still no clear timeline for when this shift could meaningfully accelerate.
- A combination of economic relief and a broader risk environment could ultimately provide the catalyst needed for sustained upside.