Gold's six-month rally versus bitcoin shows similarities to the 2019 cycle
TL;DR
Bitcoin is underperforming gold for the sixth straight month, mirroring a 2019 pattern. The bitcoin-to-gold ratio has dropped 23% this month, but a rebound may not signal bitcoin strength, just gold's relative weakness.
Key Takeaways
- •Bitcoin is on track for a sixth consecutive monthly decline against gold, similar to the 2019/20 cycle.
- •The bitcoin-to-gold ratio has fallen 23% this month to 16.3, with a recent rebound from 15.5 not necessarily indicating bitcoin strength.
- •Gold and silver have declined more sharply than bitcoin recently, suggesting the ratio's potential bottom could reflect gold's underperformance.
- •From its late 2024 peak, the bitcoin-to-gold ratio has dropped about 60%, placing bitcoin in a technical bear market against gold for around 14 months.
- •Even if the ratio has bottomed, it may not lead to strong bitcoin upside, as it could simply mean gold is weakening faster than bitcoin.
What to know:
- Bitcoin is on track for a sixth consecutive red monthly candle against gold, a pattern last seen in 2019/20.
- The bitcoin-to-gold ratio has rebounded to around 16.3 after briefly falling to 15.5 as gold and silver declined more sharply than bitcoin over the past 24 hours.
- A potential bottom in the ratio would not necessarily signal bitcoin strength, but could instead reflect continued underperformance in gold relative to bitcoin
- Bitcoin is on track for a sixth consecutive red monthly candle against gold, a pattern last seen in 2019/20.
- The bitcoin-to-gold ratio has rebounded to around 16.3 after briefly falling to 15.5 as gold and silver declined more sharply than bitcoin over the past 24 hours.
- A potential bottom in the ratio would not necessarily signal bitcoin strength, but could instead reflect continued underperformance in gold relative to bitcoin
Bitcoin BTC$83,577.46 is on track to end January underperforming gold for the sixth straight month as investors ignore the largest cryptocurrency's "digital gold" moniker and seek the safety of a metal that's historically been seen as a haven in times of economic and geopolitical turmoil.
The bitcoin-to-gold ratio, the amount of gold equivalent to 1 BTC, has dropped 23% this month, and is currently standing at 16.3. The six-month pattern closely resembles what happened in 2019, when the sequence began in August and ended in January the following year. Back then, bitcoin outperformed gold for the following five months.
The first signs of a retrenchment may be emerging. The ratio rebounded Friday by 4% after dropping to as low as 15.5 on Thursday. That low coincided with a sharp selloff across global markets, with risk assets declining aggressively.
Bitcoin is currently hovering around $82,000, down just over 2% since midnight UTC. By comparison, gold has fallen more than 8% and silver roughly 16%.
From the peak in late 2024, the bitcoin-to-gold ratio has declined by roughly 60%, placing bitcoin in a technical bear market against gold for around 14 months. Even if the ratio has now bottomed, that does not automatically imply a strong upside for bitcoin. It may simply reflect gold continuing to weaken at a faster rate than bitcoin.