Gold vs. Bitcoin: Which Will Come Out on Top?

With Bitcoin, the flagship cryptocurrency, hovering around the $70,000 mark, gold has an opportunity to steal a march on its crypto rival. Gold and digital currencies have traded in tandem over the past month, hitting new records even as stock markets approach their highs

With Bitcoin, the flagship cryptocurrency, hovering around the $70,000 mark, gold has an opportunity to steal a march on its crypto rival. Gold and digital currencies have traded in tandem over the past month, hitting new records even as stock markets approach their highs.

Bitcoin's Volatility

However, Bitcoin's trajectory has echoed that of 2021, when the cryptocurrency twice surged to new all-time highs before suffering a deep pullback. Rob Ginsberg, managing director at Wolfe Research, noted that Bitcoin has historically traded more like a "risk asset" and often provided a home for retail investors with excess liquidity (see 2021).

"Admittedly, the similarities to 2021 are undeniable, but will the fate be the same?" Ginsberg added. "While we certainly would not call for a 50% drawdown like we saw then, we would not be shocked if Bitcoin continues to stall out in the $60,000-$73,000 range."

Gold's Advantages

Gold's trajectory, however, could be more favorable. "Gold is approaching support versus Bitcoin and is oversold on a weekly basis," Ginsberg explained. "If our Bitcoin work is correct and Bitcoin continues to chop around in the $60,000-$73,000 range, this could be a great setup for gold to start to outperform Bitcoin."

Historical Data and Technical Indicators

Bitcoin hit an all-time high of $73,679 on March 14, before traders digested the rally, sending Bitcoin as low as around $60,800 last week. Ginsberg noted that Bitcoin has since bounced back towards its highs and looks poised to make another run higher, though "historically there has been formidable selling pressure above $70,000."

The Resurgence of "Digital Gold"

After Bitcoin's correlation with stocks fell dramatically in March 2023, its "digital gold" narrative has started to play out again over the last year or so. The flagship cryptocurrency's rally this year was initially fueled by the anticipated demand from the U.S. approving a Bitcoin spot ETF, coupled with expectations of a price shock shortly after Bitcoin's halving in late April.

While Bitcoin remains the king of cryptocurrencies, gold may have an opportunity to challenge its dominance. With Bitcoin consolidating at elevated levels, gold's relative valuation and technicals suggest it could be poised to outperform Bitcoin in the coming weeks or months. As always, exercise caution and conduct thorough research when investing in either gold or Bitcoin, as volatility is to be expected.