Bitcoin-To-Gold Ratio Surges 9% As Trade Tensions Ease

Bitcoin (BTC) has shown a remarkable performance against gold (XAU) over the past two weeks, with indications that this bullish trend could further intensify. This outlook is bolstered by the bullish developments in the bitcoin-to-gold ratio, which compares BTC's USD price against gold’s USD price per ounce, and the easing of U.S.-China trade tensions.

The bitcoin-to-gold ratio recently broke out of an inverse head-and-shoulders pattern, a classic bottoming formation characterized by a large trough flanked by two smaller ones, with a trendline connecting the recoveries between troughs. This breakout signals a shift from a bearish to a bullish trend, suggesting that bitcoin could continue to outperform gold.

Last week, the ratio surpassed the trendline, and technical analysis suggests it could rise to at least 35.00 from the current 32.00. This target is derived by adding the spread between the largest trough and the trendline to the breakout point, indicating a potential upward move for Bitcoin relative to gold.

The bullish technical setup aligns with historical data showing that BTC tends to catch up with gold rallies. Gold's rally peaked above $3,500 on April 22, and since then, the safe-haven yellow metal has pulled back over 8% to $3,211. During the same period, BTC's price has risen by nearly 19% to $104,000.

With the U.S. and China easing trade tensions, gold could lose ground while renewed risk-on sentiment powers BTC higher. The two nations agreed to lower tariffs on goods manufactured in both countries. China has proposed reducing tariffs on U.S. goods to 10% from 125% for 90 days, while the U.S. has proposed cutting tariffs on Chinese goods to 30% from 145%.

"The tariff reduction could see a broader return to risk-on positioning, with crypto and equities both likely to benefit from renewed investor confidence and global capital flows," said Mena Theodorou, co-founder of a crypto exchange. "The rally comes as the macro backdrop takes a positive turn: in a landmark move, the U.S. has struck trade deals with both China and the UK, while Putin and Zelensky are set to meet to discuss a potential ceasefire. These developments have lifted risk sentiment globally, crypto included," Theodorou added.