Bitcoin Drops 7% Amid Middle East Tensions, Gold Surges 10%

On June 12, 2025, Bitcoin (BTC) experienced a brief dip to $102,000 following geopolitical tensions in the Middle East, which sparked fears of potential regional escalation. This led to a risk-off sentiment in the markets, causing BTC to extend its weekly losses by 7% alongside a dump in the U.S. stock market. Concurrently, gold prices surged to $3,400, highlighting a significant divergence between the two assets. Long-time Bitcoin critic Peter Schiff seized on this divergence, asserting that BTC had hit a 'major top.' He argued that Bitcoin's failure to rise against gold for over three years, despite government backing and corporate treasury adoption, indicated that the 'bubble has peaked.' Schiff contended that the distribution of BTC from strong to weak hands, with whales cashing out to latecomers, suggested a major top had been formed.

Schiff's analysis was based on the BTC/gold ratio, which tracks BTC’s relative price performance to gold. At the time of his statement, BTC was about 22% away from clearing its 2021 peak in gold terms. In 2021, the BTC/gold ratio peaked at 37, and a fake breakout at 40 in January 2025 led to a 36% dip to 26, indicating that gold outperformed BTC by 36% in Q1 2025. However, the BTC/gold ratio was still in a multi-year uptrend, as shown by an ascending channel. This suggested that it was premature to make a 'top call,' as none of the 30 key market peak indicators showed overheated signs as of June 2025. According to a composite of market cycle peak indicators, including ETF flows and valuation models like the MVRV Z-Score, current levels were a solid 'HOLD' despite the Middle East tensions.

Investor Ken Teng, known as Chicken Genius on X, claimed that the U.S. would likely print more money to salvage its debt situation, which could rally BTC higher. This thesis, known as 'nothing stops this train' in Crypto Twitter, was echoed by Glassnode. They underscored that the plunge did not crack key short-term supports, including the short-term holder (STH) realized price at $97,000. Despite the recent pullback, BTC remained above most major short-term cost basis levels, suggesting that the top-heavy risk seemed limited.