Bitcoin undervalued relative to gold signals potential rally: Analyst
Bitcoin (BTC) is relatively undervalued compared to gold and the global money supply, which could signal a price reversal, according to Samson Mow, the CEO of Bitcoin technology company Jan3.
“Bitcoin is about 24%-66% below its trend relative to gold's market cap or global money supply, while gold is overextended,” Mow said in a Saturday post on X.
Gold futures for April delivery closed Friday at $5,247.90; Tokenized gold PAX Gold USD was trading at the time of writing at $5,404.14.
Mow also cited Bitcoin’s Z-score, a metric that tracks how close the price of BTC is to its historic average. A Z-score of 0 indicates that the price is in line with the average, while a Z-score above 0 indicates that the price is moving above average levels.
The Z score of the Bitcoin-to-gold ratio. Source:
TradingView
A score below 0 signals that the price is trading below the average. When the Z score of the Bitcoin-to-gold ratio drops below -2, Bitcoin has experienced “major” price rallies, Mow said. The Z score of the BTC-to-gold ratio is about -1.24 at the time of writing.
Data from TradingView shows that the metric dropped below -3 in November 2022, amid the collapse of crypto exchange FTX and the price of BTC rallied by over 150% over the next 12 months.
Earlier, a similar pattern played out during the Covid crash in March 2020, when the metric fell below -2 and Bitcoin reached a low of about $3,717. Bitcoin surged by over 300% in the following 12 months, and by November 2021, BTC reached what was then the all-time high of about $69,000.
Related: Bitcoin traders eye Iran reactions as oil sparks US 5% inflation forecast
Bitcoin to crash to $50,000?
The analysis from Mow is a contrarian view to other analysts, who forecast more pain ahead for the crypto market and a further drop in Bitcoin prices due to investor uncertainty and geopolitical tensions.
The price of BTC may be headed toward $50,000, according to crypto market analysts, who say that price action may be mirroring the 2022 bear market.
Bitcoin fell by over 50% from peak to trough, to a low of $60,000, before staging a limited recovery to current levels of near $66,400 in the wake of this weekend’s developments in the Middle East.
Magazine: Bitcoin to see ‘one more big thrust’ to $150K, ETH pressure builds: Trade Secrets
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
US Treasury yield curve approaches inversion! Is the bond market questioning the outlook for the US economy?
The U.S. Treasury yield curve is rapidly approaching the inversion threshold—the spread between the 10-year and 2-year yields has narrowed to historic lows, and bank stocks have responded with a technical correction. This warning signal, regarded as a "hard rule" for recession, is tearing apart market consensus: some are betting the curve will soon invert, while others firmly believe economic resilience will mitigate the risk. Amid ongoing Federal Reserve rate hikes, the outcome of this bond market game may reshape the narrative logic of the entire asset market.
From ICU to KTV! The Polarized "AI Narrative" Leaves Investors "Exhausted"
In just two weeks, the Nasdaq 100 experienced an extreme rollercoaster: first losing $600 billion in market value due to “AI threat” concerns, then rebounding to reclaim $3 trillion thanks to the viral Meta assistant. Analysts believe that market sentiment is swinging violently between fear and greed, detached from fundamentals. The turmoil has driven Nvidia’s valuation to a ten-year low, intensified the bull-bear divide, and the high volatility driven by narratives has become a long-term norm for investors. This week, Micron will release its financial report; regardless of the outcome, the sharp swings in market sentiment are unlikely to subside.
Weekly Preview: Micron (MU.US) earnings test the quality of AI infrastructure, OpenAI and White House AI meeting resonance, PCE and Nonfarm Payrolls set the tone for October interest rates
This week, the market's focus will shift from politics and product launches to financial reports and macroeconomic data.
"Over 5% 10-Year US Treasury Yield" Fails to Crush AI Investment Frenzy—Is the Real "AI Kill Line" an Inverted Yield Curve?
The bond market is gradually sending warning signals to the economy, indicating that the Federal Reserve's series of interest rate hikes will begin to shift market sentiment, making people increasingly concerned that the US economy may fall into stagnation.
Crypto prices
More
