As Bitcoin (BTC) grapples with the latest downturn in the cryptocurrency market, struggling to break past the formidable $84,000 resistance, gold (XAU) shines brightly, achieving an unprecedented high of $3,000 per ounce on March 14.
Bitcoin Gets Outshined By Gold
The year 2025 has begun on a rocky path for Bitcoin, the world’s foremost cryptocurrency. Currently down over 10% year-to-date (YTD), BTC has plummeted from approximately $94,000 at the start of January to around $84,000 at present. In stark contrast, gold has experienced a remarkable resurgence, gaining nearly 13% during the same timeframe.
Market analyst Northstar shared a revealing chart on X yesterday, showcasing the BTC-to-gold ratio over the last 12 years. This chart indicates that Bitcoin is beginning to dip below a critical support line that has withstood the test of time for more than a decade.
If Bitcoin continues to register price action below this support level for several weeks or months, it could signify the conclusion of the current crypto bull run. The underperformance of BTC in comparison to gold is further highlighted by the contrasting capital flows into Bitcoin and gold exchange-traded funds (ETFs).
Data from the World Gold Council reveals that US-based spot gold ETFs have seen inflows exceeding $6 billion YTD, with global spot gold ETFs accumulating more than $23 billion in inflows.
In sharp contrast, data from SoSoValue shows that US-based spot Bitcoin ETFs have experienced nearly $1.5 billion in net outflows YTD, reflecting a notable shift in investor sentiment from risk-oriented to risk-averse assets.
Several factors may contribute to this growing aversion to risk-on assets, including the implementation of new trade tariffs by US President Donald Trump, the hawkish stance of the US Federal Reserve (Fed), and the recent turmoil in the stock market.
Is The Crypto Bull Run Over?
The underperformance of BTC compared to gold raises doubts about the sustainability of the current crypto bull market. The total cryptocurrency market capitalization has diminished by over $600 billion since the beginning of the year, now hovering around $2.8 trillion.
Peter Schiff, a well-known advocate for gold, posits that Bitcoin has already been in a bear market for the past three years. He recently stated on X:
One Bitcoin now buys 27.7 ounces of gold. At its peak in 2021, one Bitcoin bought 36.3 ounces of gold. That means that in terms of gold, which is real money, the price of Bitcoin has fallen by 24%. So Bitcoin has been in a stealth bear market for the past three and a half years.
Despite this, favorable macroeconomic developments could indeed reverse fortunes for Bitcoin. US inflation appears to be moderating, which may incentivize the Fed to pivot towards quantitative easing, thereby enhancing market liquidity and potentially invigorating risk-on assets.
Furthermore, a potential breakdown in the US dollar index could once again ignite optimism for assets like stocks and cryptocurrencies. At the time of writing, BTC is trading at $84,902, marking a 3.8% increase in the last 24 hours.
