While gold has recorded significant gains, Bitcoin (BTC) is still showing major bearish signs, with the price trending towards lower support levels and currently approaching the much-watched $82,000 mark, a pivotal point in determining the next major direction for the world’s largest cryptocurrency.
Against this backdrop, market analyst Dr. Proffitt drew attention to what he describes as one of the most important charts in the current Bitcoin cycle: the Gold to Bitcoin (GOLD/BTC) ratio.
What the gold-to-bitcoin ratio suggests
According to This chart has repeatedly provided reliable signals of major market tops and bottoms. He noted that he first shared this framework almost a year ago, highlighting the historical pattern that Bitcoin tends to peak when 0.02 BTC equals 1 ounce of gold and bottom when the ratio reaches 0.11 BTC per ounce.
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Proffitt pointed out that this relationship played out in the last cycle as well, pinpointing Bitcoin’s 2021 high and 2022 low. He argues that the same pattern has repeated itself in the current cycle, with Bitcoin’s recent high near $125,000 when the gold-to-bitcoin ratio once again reached the 0.02 level.
The key question now is whether the market will reach the 0.11BTC per ounce level again, which has historically signaled a crisis, he says. bottom. I calculated the profit based on the current price.
Assuming the price of gold is around $5,500 per ounce, dividing that number by 0.11 shows that the price of Bitcoin is closer to $50,000. He noted that this result is consistent with his broader expectation that Bitcoin’s cycle low could fall somewhere between $50,000 and $60,000.
He added that even under further policies. bullish scenario When it comes to gold, the analysis still supports his theory. If gold rises to $7,000 per ounce, the same ratio would mean Bitcoin’s bottom is around $63,000. In his view, both scenarios support the idea that gold is likely to outperform bitcoin in the coming months.
Is BTC approaching a late cycle bear phase?
However, not all analysts share the bearish outlook on Bitcoin. Technical analyst Michael van de Poppe offers a contrasting perspective. proposed Gold’s recent strength may be nearing exhaustion, potentially setting the stage for capital to return to Bitcoin.
Van de Poppe highlighted Bitcoin’s Relative Strength Index (RSI) against gold, measured on a weekly time frame, noting that it has reached an all-time low level.
In his assessment, this suggests a sharp imbalance in valuations, with one asset appearing overvalued in the short term and the other significantly undervalued. He described the situation as part of what he called the “big rotation.” market cycle.
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The analyst also pointed to Bitcoin’s Z-score metric. This is a metric used to assess whether a cryptocurrency is overvalued or undervalued by comparing its market capitalization to its volatility-adjusted realized market capitalization.
According to Van de Poppe, Current Z-score Bitcoin is lower than several major historical lows, including the 2015, 2018, and 2020 coronavirus crashes, and the 2022 bear market lows. In his opinion, this shows that BTC is already deep into a bear market and may be nearing its final stage.
At the time of writing, BTC was trading at $83,435 with losses of 2.2% and 7% recorded on the 24-hour and 7-day time frames respectively.
Featured image from DALL-E, chart from TradingView.com
