For years, Bitcoin (BTC) traders have been monitoring its price relative to gold (XAU) for clues when BTC hits bottom in USD terms. However, in 2026, the BTC to gold signals start to become less reliable.
Important points:
-
Bitcoin reached undervaluation relative to gold and fell below the power law trend.
-
BTC/XAU is already below the 200-2W EMA, which is historically aligned with the bottom.
-
Perhaps gold’s next move will determine whether BTC makes a rescue recovery or not.
Bitcoin continues to fall in terms of gold
As highlighted by analyst Julius, this week the BTC/XAU ratio, or the value of Bitcoin to gold, moved away from a long-term “power law” trend for the first time in history.
A power law is a long-term trend curve used by some analysts to model Bitcoin’s long-term growth path. In trading conditions, if the price goes above the curve, it indicates a possible overvaluation, and if it goes down, it indicates a possible undervaluation.
As of January, BTC/XAU was at its most undervalued stage. Gold prices soared to an all-time high above $5,000, reaching this level as the market turned risk-off due to concerns about yen intervention and a U.S. government shutdown.
This comes even as most Wall Street firms predicted further increases in gold prices in 2026, including Bank of America, which last week said the precious metal would rise above $6,000 by the end of the year.
In contrast, the Bitcoin market expressed concern about the four-year cycle theory. As stated in it, BTC price peaked at around $126,200 in October 2025 and could fall below $50,000 in the coming months.
This further suggested a continuation of the downtrend for BTC/XAU in the coming weeks, rather than a cyclical bottom setting.
Do technicals suggest a bottom for BTC price?
A continued decline in the BTC/XAU ratio would also threaten a decisive break below the 200-2W EMA (Blue Wave), a level that has historically coincided with the bottom of the true BTC/USD cycle.
This included a false breakdown signal in 2022, where BTC/XAU fell below the 200-2W EMA, but was able to reclaim it as support two months later.
In 2026, this ratio is already below the same EMA and macro catalysts are increasing the possibility of further decline, which could cause the bottom fractal of BTC/XAU to collapse.
Conversely, Citi warned that gold’s rally could stall or reverse in the second half of 2026 if US real yields rise, the dollar stabilizes and risk appetite returns. In that scenario, demand for defensive risk-off hedging is likely to decline.
Related: Bitcoin trendline cross mimics 2022 amid ‘insane’ BTC vs. silver breakdown
Gold’s decline could relieve some of the pressure on BTC/XAU and restore Bitcoin’s chances of reaching the $140,000-plus target price, as predicted by Standard Chartered and others.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions. While Cointelegraph strives to provide accurate and timely information, we do not guarantee the accuracy, completeness, or reliability of the information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph is not responsible for any loss or damage arising from reliance on this information.
