Widening performance gap between Bitcoin and gold, increasing likelihood of a prolonged bear market

Amid widespread bearish trends, the performance gap between Bitcoin and gold is reaching historic levels. Recent data suggests that this divergence is likely driven by structural shifts rather than mere short-term fluctuations, signaling that this trend could persist for an extended period.

BTC-to-Gold Ratio Near Historic Lows

Currently, the Bitcoin-to-gold price ratio hovers around 18.46, which is approximately 17% below the 200-week moving average of 21.90 based on about four years of data. Looking back, considering that this ratio peaked at about 40.9 in December 2024, Bitcoin has fallen roughly 55% relative to gold.

This decline is significant compared to previous bear cycles. During the 2022 bear market, the ratio dropped by 77%, and during the 2017-2018 cycle, it experienced an extreme correction of 84%. These patterns suggest that the current downtrend may follow a trajectory similar to past bear markets.

Comparing Bear Cycle Corrections, Deeper Adjustments Possible

A key point is the 200-week moving average. Historically, when this ratio fell more than 30% below the average during the last bear market, it remained below that level for over a year. Given that the current decline began in November, if past patterns repeat, this level could persist into late 2026.

This indicates that Bitcoin is lagging behind gold to such an extent that reconsideration of the “Digital Gold” narrative may be warranted. Year-to-date, gold has risen about 12% from roughly $4,900 per ounce, while Bitcoin has seen only slight gains, currently around $88.13K, reflecting a -13.08% change from the start of the year.

Long-term Performance Gap Reflects Changing Investor Preferences

The differences become even clearer over 1- and 5-year horizons. Over the past five years, Bitcoin has increased by approximately 150%, whereas gold has gained about 160%, giving gold a slight edge. This is not just a matter of returns but also indicates shifts in asset allocation priorities among investors.

Market sentiment indicators support this view. For example, the JM Bullion Fear-Greed Index shows extreme optimism toward gold, while similar crypto sentiment indicators remain in fear territory. These psychological differences appear to influence actual capital flows.

Implications of Diverging Store of Value Preferences

A core distinction is that Bitcoin is being traded like a high-beta risk asset. Despite the “Real Assets” narrative, investors seeking safe havens are favoring physical gold and silver over digital tokens. This suggests that Bitcoin is still perceived as a volatile risk asset.

Gold prices per ounce have surged past $5,500, with a one-day nominal value increase of about $1.6 trillion, indicating an overheated trading environment. In this context, the performance gap between Bitcoin and gold is likely to continue, and investors should reassess the relative roles of these assets within their portfolios.