Bitcoin’s performance relative to gold has continued to deteriorate, reinforcing signals that the asset remains in a prolonged bear phase when measured against traditional stores of value. The ratio between Bitcoin and Gold has fallen sharply from its late 2024 highs, with bitcoin now down roughly 55% against gold from its December peak. The BTC to gold ratio is trading well below its long term trend level, sitting meaningfully under the 200 week moving average that many analysts use to gauge macro positioning. This breakdown challenges the digital gold narrative that has often underpinned bitcoin’s role in diversified portfolios. While bitcoin has managed to hold modest gains in dollar terms this year, its relative weakness versus gold highlights a shift in investor preference toward assets perceived as more stable during periods of macro and geopolitical uncertainty.
The divergence has become more pronounced as gold continues to push toward record territory, supported by central bank demand and persistent risk aversion across global markets. Gold prices are up strongly year to date, while bitcoin has struggled to reclaim momentum after last year’s rally. On longer time frames, the contrast remains unfavorable for bitcoin. Over both one year and five year horizons, gold has delivered comparable or better returns, eroding one of bitcoin’s long standing comparative advantages. Analysts note that in previous cycles, sustained moves below the long term average in the BTC gold ratio have tended to persist for extended periods, often lasting a year or more before a durable reversal takes hold. The current structure suggests that relative underperformance could continue if historical patterns repeat.
Looking back at prior market cycles provides limited comfort for bullish positioning. During the 2022 downturn, bitcoin’s ratio against gold fell far deeper below its long term average and remained suppressed for more than twelve months. An even sharper drawdown occurred during the 2017 to 2018 cycle, when bitcoin lost more than 80% of its value relative to gold. While the current decline is less severe so far, the trajectory mirrors earlier bear phases rather than short lived corrections. The sustained strength of gold alongside subdued crypto risk appetite indicates that capital continues to favor defensive assets. Until bitcoin can regain relative strength against gold, analysts see limited evidence that the broader market has transitioned out of its current consolidation and caution phase.
