Bitcoin Now Most Undervalued Versus Gold: Will BTC Price Rebound in 2026?

Bitcoin’s 2025 underperformance contrasted sharply with gold’s extraordinary 55% rally. The cryptocurrency declined 6.5% in 2025, while gold and the Nasdaq rose significantly. This divergence reflects shifting market dynamics and liquidity patterns.

The drop in BTC’s value was driven by Federal Reserve quantitative tightening, which reduced the central bank’s balance sheet by around $600 billion. This liquidity contraction created headwinds for Bitcoin, which historically relies on monetary expansion for upward momentum.

Bitcoin traded in a volatile range between $88,000 and $126,000 in 2025 before ending the year with a 30% correction. Despite high trading volumes on major exchanges, BTC struggled to maintain upward movement in a tightening monetary environment.

Why Did Bitcoin Underperform Gold in 2025?

Dollar liquidity contraction directly impacted Bitcoin’s performance in 2025. Federal Reserve quantitative tightening, which reduced the central bank balance sheet by $600 billion before ending in December, removed the monetary fuel historically responsible for Bitcoin’s growth since 2009.

Bitcoin’s volatility in 2025 highlighted its sensitivity to liquidity conditions. The cryptocurrency traded in a tight range with no clear trend as dollar supply remained constrained. This contrasts with previous cycles when Bitcoin benefited from monetary expansion.

Central bank gold accumulation created a structural demand advantage over Bitcoin. Global central banks purchased over 1,000 metric tons of gold annually for three consecutive years, pushing prices to new highs.

How Did Bitcoin’s Divergence From Gold Develop?

Bitcoin’s 2025 underperformance versus gold was driven by multiple factors. Unlike gold, Bitcoin failed to position itself as a safe-haven asset during market volatility. When equities faced stress in April and May 2025, Bitcoin fell alongside tech stocks while gold rallied.

The 2022 U.S. freeze of Russia’s treasury holdings triggered a global shift toward gold as a neutral reserve asset. This reinforced gold’s appeal as a store of value, a role Bitcoin has yet to convincingly fill.

Bitcoin advocates argue that BTC could serve as a sovereign reserve asset. However, no major central bank has allocated significant reserves to Bitcoin as of early 2026. Institutional investors prefer gold’s 10,000-year track record over a 15-year-old digital protocol.

What Are Analysts Watching for BTC’s 2026 Outlook?

Bitcoin’s 2026 outlook depends on whether dollar liquidity reverses its 2025 contraction. The Federal Reserve’s Reserve Management Purchases, launching at $40 billion monthly, could restore the liquidity conditions that historically supported Bitcoin’s bull markets.

Analyst forecasts for Bitcoin in 2026 vary widely, from bearish targets around $60,000 to bullish predictions of $250,000. These projections incorporate expected Federal Reserve rate cuts and regulatory clarity from the potential passage of the Digital Asset Market Clarity Act.

Historical patterns suggest Bitcoin typically rallies 3-6 months after major monetary policy shifts. The December 2025 end to quantitative tightening and launch of Reserve Management Purchases could catalyze upside momentum entering Q2 2026.

Bitcoin’s correlation with gold has historically signaled major price reversals. In the past four comparable instances, Bitcoin rallied by an average of 56% within roughly two months after its correlation with gold turned negative.

Bitcoin’s 52-week correlation with gold reached zero for the first time since mid-2022 in late January 2026. This divergence historically precedes strong Bitcoin rallies and may signal a potential capital rotation back into crypto markets.

Bitcoin’s undervaluation against gold in late 2022 preceded a 150% price rally over the following year. Similar patterns have occurred after major corrections, with Bitcoin surging following periods of extreme undervaluation.

Cathie Wood of ARK Invest highlights Bitcoin’s potential as a portfolio diversifier. Bitcoin’s low correlation with gold (0.14), bonds (0.06), and the S&P 500 (0.28) provides investors with higher returns per unit of risk.

Bitcoin’s protocol creates structural scarcity as supply growth slows from 0.8% annually over the next two years to 0.4% thereafter. This predictable supply model, combined with rising demand, supports long-term value retention.

Spot Bitcoin ETFs have seen strong inflows in early 2026, with over $1.7 billion in a three-day streak. This contrasts with earlier outflows in January and indicates improving investor sentiment.

Bitcoin’s price has risen by approximately 360% since late 2022 due to growing demand and limited supply. These dynamics could push Bitcoin toward a core role in both retail and institutional portfolios in 2026.