As Bitcoin (BTC) faces challenges amidst the recent cryptocurrency market downturn – struggling to convincingly surpass the $84,000 resistance level – gold (XAU) continues to thrive, reaching an all-time high of $3,000 per ounce on March 14.
Bitcoin Outperformed by Gold
The year 2025 has commenced on an unstable footing for the leading cryptocurrency. BTC has declined over 10% since the beginning of the year, dropping from around $94,000 on January 1 to approximately $84,000 at the time of this report. Conversely, gold has surged nearly 13% during the same timeframe.
Market analyst Northstar shared a chart on X yesterday that depicts the BTC-to-gold ratio over the past 12 years. The data suggests that BTC may be breaking below a crucial support line that has remained intact for over a decade.
If Bitcoin maintains pricing below this support level for an extended period, it could indicate the conclusion of the ongoing crypto bull market. Furthermore, BTC’s underwhelming performance compared to gold is reflected in the differing capital movements between BTC and gold exchange-traded funds (ETFs).
According to the World Gold Council, US-based spot gold ETFs have garnered over $6 billion in inflows year-to-date. On a global scale, spot gold ETFs have attracted more than $23 billion in inflows.
In contrast, data from SoSoValue shows that US-based spot BTC ETFs have experienced nearly $1.5 billion in net outflows year-to-date. This considerable disparity in capital movement illustrates a transition in investor focus from risk-on to risk-off assets.
Several factors likely contribute to investors’ increasing reluctance towards risk-on assets, including new trade tariffs from US President Donald Trump, the Federal Reserve’s hawkish monetary policy, and the recent downturn in the stock market.
Is the Crypto Bull Market Over?
The underperformance of BTC in comparison to gold raises questions about the sustainability of the current crypto bull market. Since the start of the year, the total crypto market capitalization has lost over $600 billion, now standing around $2.8 trillion.
Prominent gold advocate Peter Schiff claims that BTC has already been in a bear market for the last three years. In a post on X, Schiff remarked:
One Bitcoin now buys 27.7 ounces of gold. At its peak in 2021, one Bitcoin purchased 36.3 ounces of gold. This indicates that, in terms of gold, which is tangible money, the price of Bitcoin has dropped by 24%. Therefore, Bitcoin has been in a hidden bear market for the past three and a half years.
That said, favorable macroeconomic developments could still shift the momentum back in BTC’s favor. For instance, the apparent easing of US inflation might prompt the Fed to transition toward quantitative easing, enhancing market liquidity – potentially benefiting risk-on assets.
Similarly, a decline in the US dollar index could rekindle optimism for assets such as stocks and cryptocurrencies. At the time of writing, BTC is trading at $84,902, reflecting a 3.8% increase over the past 24 hours.
