Key Takeaways
Will Gold’s Cooldown Boost BTC’s Recovery?
This could be possible, especially if ETF inflows change from gold to BTC.
What do experts think about gold outperforming BTC?
According to Bitwise’s CIO, BTC could see its ‘golden 2025’ moment if the selling pressure from long-term holders is fully absorbed by ETFs.
After rising +30% since August, gold suffered a cooldown to $4.4k and fell 6% earlier this week.
This move helped the BTC/gold ratio extend its recovery by 8%. Specifically, the ratio tracks the price performance of Bitcoin [BTC] compared to gold.
Source: BTC vs Gold, TradingView
In other words, the 8% recovery in the ratio indicated that BTC strengthened slightly against gold. However, will the shift spread even further and elevate BTC as ‘digital gold’?
Bitwise’s take on Bitcoin
According to the CIO of Bitwise Matt HouganThe gold price rally only exploded this year. However, central banks have been aggressively accumulating this since 2022.
He claimed that gold investors may have lost their money over the past two years, but seller exhaustion hit this year, sending the price off the charts.
Source: Bitwise
According to him, BTC could follow a similar path. Long-term holders have been selling into ETFs and corporate government bonds since July. Hougan added,
“But at some point, those sellers will be exhausted, as the gold example suggests. As long as the combination of ETF and corporate buying continues, Bitcoin will have its ‘Gold 2025’ moment.”
That said, gold has seen more ETF inflows from July to date. The inflow rose from $5 billion to over $35 billion, causing the gold price to rise from $3.2k to almost $4.4k.
During the same period, BTC bled due to ETF inflows decreased from $20 billion to $8 billion, coinciding with what seemed like a massive rotation from BTC to gold.
Source: BOLD ETF
During BTC’s outperformance, such as in the second quarter, BTC ETFs attracted more inflows than gold. So, if gold registers an extended pullback, BTC could come back into the spotlight and push higher.
Here it is worth pointing out that the weekly price chart for the BTC/gold ratio was also at an inflection point at the time of writing and reflected the aforementioned projection. Since 2023, the BTC/gold ratio has even been above moving averages, with the ratio once again testing the lower limit of the indicator.
Source: BTC/GOLD ratio, TradingView
If this is defended, a rally would mean BTC outperformance, with an immediate BTC/gold ratio target of 37 (46% potential gain).
That would imply about $150,000 per BTC if hit. However, whether the bulls will make such a move remains to be seen.