According to Bloomberg’s commodities expert, Mike McGlone, Bitcoin has shown a disappointing performance compared to gold in terms of price since its peak in 2021.
In the Bitcoin/gold ratio, the cryptocurrency would have dropped by 40% compared to its absolute value of 37 at the end of the crazy price surge in 2021.
We will observe a reversal of trend in the coming months or will gold continue to deliver superior performances?
All in the details below.
Summary
Mike McGlone: gold price performance superior to Bitcoin
Mike McGlone, a commodities analyst at Bloomberg, has noticed that the recent rise in the price of Bitcoin has not been enough to favor the cryptocurrency over gold, which has been showing significantly better performance since the end of 2021.
Both assets can be framed as safe havens, capable of offering shelter to their investors in the face of the danger of inflation of fiat currencies or in case of strong political or social imbalances.
Both are characterized by a limited supply, which in the case of Bitcoin materializes in a digital context while for gold in a physical context.
However, price growth for the two resources is extremely variable and may favor one over the other based on certain time periods.
McGlone astutely observed that E-mini S&P500 Futures have never left gaps on weekly charts since their approval in 1997. In December, a gap was created ranging from 4,614 USD to 4,652 USD, with obviously negative implications for risky assets like Bitcoin.
The analyst continued his analysis by stating that since 2017 all the gaps have been filled and therefore we could expect a similar scenario in the future, with gold gaining an advantage over its virtual counterpart.
Here are his words:
“What is noteworthy is that the bitcoin/gold ratio, which tends to carry the beta, has been dragged by the biggest pump in history up to the 2021 high.”
The highly speculative digital asset traded 24 hours a day, 7 days a week could be an important leading indicator and equivalent to about 21 ounces of gold on January 2nd. The ratio is about 40% lower than the peak of 37x in 2021.”
The recent negative performance of Bitcoin compared to that of gold could suggest a possibility of recovery for the cryptocurrency, which tends to alternate the spotlight with the raw material.
To note how a potential comeback for Bitcoin could be linked to a easing of fears regarding a possible recession in the USA: faced with a catastrophic event like this, investors would prefer gold, obviously less risky.
Furthermore, it is important to remember that gold has been favored in the last 2 years by a restrictive US monetary policy, with rising federal funds rates in 2022 and a slowing economy.
Now with the advent of Bitcoin spot ETFs, the positive effects on the price could be evident, highlighting the cryptocurrency in the debate with gold.
It will be interesting in the coming months to see how the situation will evolve when (and if) the aforementioned gap on the E-mini S&P500 Futures is filled, and if the movement will lead to the expected results.
Meanwhile, we note with interest the Bitcoin/gold ratio in the “Pearson Correlation” chart, which highlights a very oscillating correlation, indicative of frequent trend reversals.
There would be a frequent alternation of periods in which the two assets are highly correlated, and periods in which each goes its own way.
BTC Price Analysis: $50,000 Coming?
Looking at the analysis of Bitcoin prices, we can notice a fertile ground for a bullish continuation of the asset, despite the sharp decline recorded at the time of approval of the spot ETFs in the USA.
The cryptocurrency has a price of 43,160 USD at the time of writing, up 0.5% in the last 24 hours with a market capitalization of approximately 846 billion dollars, about 16.3 times lower than that of gold.
In the last year, BTC has grown by 84% while gold has only grown by 5.84%, indicating a significantly higher volatility that has not been enough to reach the previous all-time highs of November 2021, while for the commodity the surpassing of its previous highs has already occurred at the end of 2023.
The phase of dominance for the cryptocurrency could however come soon, with bulls aiming for $50,000 as the next target while bears struggle to push BTC below $40,000.
The $50,000 USD level seems to be a particularly important level for the future price action of the crypto as it divides the two peaks formed in the last bull run from the remaining part of the chart.
In detail, there have been only 17 weeks in which Bitcoin managed to open and close above that target, with the majority of trades occurring at a lower price.
A return to 50,000 USD would increase the chances of a recovery of new highs, with 100,000 USD in sight as the next target.
In the short term, however, things could go differently than hoped by bitcoiners, with the decentralized currency going through a very delicate phase of its existence.
After a definitely positive year in terms of prices, although performing worse compared to gold, the cryptocurrency should see a significant correction if a similar movement to the previous cycle occurs, in which BTC went from 13,000 USD to 6,000 USD.
Keep an eye on the weekly RSI at this moment, as it seems to indicate the possibility of a downturn ahead: this is where the bulls come into play, who must absolutely keep the price as high as possible in anticipation of the April halving.
