This week, we'll look at both the long and short term relative performance of Bitcoin and gold to see if we can find any clues about which asset will perform better going forward. There is no question that Bitcoin has been one of the best performing assets of all time since its inception, crushing the returns of virtually every other investment asset. However, the charts are starting to paint an interesting picture about what might come next.

 

 

The first chart shows the long term ratio of gold to Bitcoin. When the chart is declining, Bitcoin is outperforming - and did it ever!  Back when gold was making an historic top in 2011, you could have traded one oz. for 500-700 Bitcoins, depending on when you bought it. Today, it would cost you more than 23 oz. of gold just to purchase a single Bitcoin! However, a few things stand out if you're a gold bull. First, note the long term resistance line that formed in 2011/2012 and was tested consistently from late 2022 to early 2024: it appears we've seen a breakout. Next, note that the ratio entered a horizontal trading range in late 2020 that may be giving us a double bottom. Should the ratio eventually break out of the channel, gold may very well outperform Bitcoin going forward. It will take some time for this chart to resolve, but it appears that the path of least resistance at this point is indeed up.

 

 

The second chart is a short term combo chart with gold on top and Bitcoin on the bottom. Despite all the laser-eyed hype over Bitcoin on social media over the past few years, the asset is actually down about 13% since it first hit the $65,000 area in April 2021. Gold on the other hand is up about 33% over the same period! Bitcoin will need to surpass $65,000 convincingly in order to avoid a major double top formed by the 2021 and 2024 highs. Gold on the other hand is looking strong near all time highs. 

Time will tell which asset outperforms going forward, but for the first time since Bitcoin's inception, gold appears up to the task.

 

 

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The information contained in this article is for information purposes only and does not constitute investment advice or a recommendation to buy or sell.

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