Bitcoin’s value relative to gold fell to its lowest level ever in January after adjusting for the global money supply, according to Bitwise Europe. This extreme in the BTC/gold ratio echoes past market bottoms, with the last comparable level seen in 2015, indicating BTC was deeply undervalued against gold. That undervaluation preceded an approximately 11,800% rally to $20,000 from around $165 over roughly two years.
Analyst Michaël van de Poppe wrote on X that today represents a better opportunity to buy Bitcoin than in 2017. Other analysts expect some capital to rotate from gold into Bitcoin this year. That view is shared by André Dragosch of Bitwise Europe and Pav Hundal of Swyftx, who said such rotations could begin in February or March. However, capital rotation may not happen quickly, according to the same analysts.
The indicator that tracks Bitcoin’s strength against gold has recently moved toward an extreme, a level historically associated with BTC market bottoms. Not all analysts agree on a shift into BTC; Benjamin Cowen warned that the downtrend could last longer than many expect and BTC may continue to underperform versus equities. Cowen also argued that even if precious metals stay strong, a quick move into Bitcoin is unlikely. In contrast, others highlighted that gold has doubled in price over the past year while Bitcoin has fallen about 18%, signaling diverging momentum.
Not everyone agrees that a rotation from precious metals to Bitcoin is imminent. Cowen warned that Bitcoin’s downtrend may linger longer than many expect, suggesting BTC may underperform against equities. He added that even with strength in precious metals, a rapid move into Bitcoin is unlikely.
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