Bitcoin's Undervaluation Relative to Gold and the Macro Case for a Resilient Bull Cycle

The year 2025 has been a tale of two assets: gold, the traditional safe haven, surged over 55%, while Bitcoin, the digital store of value, turned negative, marking its first time as the worst-performing asset class since 2011. This divergence has sparked a critical debate: Is Bitcoin undervalued relative to gold, and does this create a compelling case for a resilient bull cycle? By analyzing historical BTC/Gold valuation patterns, macroeconomic drivers, and cyclical momentum indicators, we uncover a narrative that suggests Bitcoin is poised for a significant reversal.

Historical BTC/Gold Valuation Patterns: A Downtrend and Oversold Signal

The Bitcoin-to-gold ratio, a metric that compares Bitcoin's price in gold terms, has long served as a barometer for Bitcoin's relative strength. As of late 2025, the ratio stood at approximately 26 ounces of gold per Bitcoin, down sharply from levels of 30-38 ounces observed in prior years. This decline reflects a bearish trend marked by lower highs and lower lows, with Bitcoin failing to outperform gold-a key criterion for a bull market, as emphasized by analysts like Kevin Wadsworth and Patrick Karim.

However,

the ratio recently hit historic oversold levels, mirroring conditions seen in November 2022, which historically preceded multi-month uptrends. This suggests that while Bitcoin's USD price may appear weak, its valuation against gold indicates it is entering a value zone. For instance, in October 2025, gold suffered a $2.5 trillion market capitalization loss over two days, dropping from $4,375 to $4,042 per ounce, while Bitcoin maintained stability above $100,000. This resilience, despite Bitcoin's underperformance in USD terms, hints at a potential re-rating.

Macroeconomic Drivers: Gold's Safe-Haven Appeal vs. Bitcoin's Risk Asset Correlation

Gold's dominance in 2025 can be attributed to its entrenched role as a hedge against macroeconomic uncertainty. With global debt levels reaching unsustainable heights and central bank policies losing credibility, investors flocked to gold, which is not tied to fiat currencies or interest rate cycles . In contrast, Bitcoin's performance remained closely linked to risk assets like the Nasdaq, making it vulnerable to sharp corrections during periods of regulatory scrutiny or liquidity crunches .

This divergence is underscored by Santiment's analysis, which noted a four-year break in Bitcoin's correlation with equities, with Bitcoin falling 15% in three months compared to gold's 21% gain. JPMorgan further reinforced this view, stating Bitcoin is trading below its fair value when adjusted for volatility relative to gold. Meanwhile, Bitwise's research estimated Bitcoin is undervalued by 66%, with a fair value potentially reaching $270,000, while gold appears overvalued by 75%. These metrics highlight a stark valuation gap that could drive capital reallocation into Bitcoin in the coming cycle.

Cyclical Momentum Indicators: Bearish Divergences and Retracement Potential

Technical analysis of the BTC/Gold ratio reveals bearish divergences in key momentum indicators. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) histogram for the ratio have shown weakening momentum, suggesting a potential retracement toward critical Fibonacci levels (15–12) if the trendline breaks. Daily data as of August 2025 indicated a ratio of 0.5940, down 1.73% from the previous day and 97.70% from one year prior.

Gold, meanwhile, has entered overbought territory, with its RSI above 70 and a MACD signal line above zero, indicating stretched conditions that historically precede corrections. While gold's 12-month moving average at $2,925 provides support, its 36-month moving average suggests a potential pullback. In contrast, Bitcoin's volatility and association with macroeconomic cycles position it to benefit from a shift in risk appetite, particularly if global liquidity conditions improve or regulatory clarity emerges.

The Bull Case: A Resilient Cycle Awaits

The confluence of undervaluation, oversold conditions, and diverging macroeconomic drivers creates a compelling case for Bitcoin's next bull cycle. Historically, Bitcoin has outperformed gold during periods of monetary expansion and technological adoption, and the current environment-marked by a $2.5 trillion gold market correction and a 66% undervaluation gap-suggests a re-rating is overdue.

Moreover, the BTC/Gold ratio's historical tendency to reverse after hitting oversold levels, as seen in 2022, implies a potential multi-month rally if Bitcoin can break above key resistance levels. This would align with Bitwise's fair value estimate of $270,000 and JPMorgan's volatility-adjusted valuation model. While gold's overbought conditions and stretched momentum indicators signal caution, Bitcoin's undervaluation and cyclical positioning make it an attractive candidate for capital inflows in the next phase of the macroeconomic cycle.

Conclusion

Bitcoin's undervaluation relative to gold, supported by historical ratio analysis, macroeconomic divergences, and technical indicators, paints a picture of an asset primed for a resilient bull cycle. As gold's overbought conditions and stretched momentum suggest a potential correction, Bitcoin's oversold status and valuation gap offer a compelling case for long-term investors. The BTC/Gold ratio, a critical tool for understanding capital flows, underscores the importance of viewing Bitcoin through a macro lens-a perspective that could unlock significant returns in the coming years.