The tug-of-war between gold and Bitcoin continues, with recent technical analysis suggesting a potential shift in favor of the cryptocurrency. While both assets have benefited from broader macroeconomic anxieties, a closer look reveals diverging performance and underlying dynamics. The question for investors isn’t simply which is the better hedge, but whether a strategic rotation between the two might be warranted.
Bitcoin experienced an unexpected downturn in 2025, defying expectations that a backdrop of inflation and geopolitical uncertainty would propel its price higher. Traditionally, both gold and Bitcoin are viewed as safe havens, benefiting from dollar debasement and economic instability. However, the divergence in their performance last year casts doubt on Bitcoin’s “digital gold” narrative. Gold, with its centuries-long history as a store of value, once again demonstrated its resilience, attracting investors during times of heightened risk.
The fundamental difference lies in their inherent characteristics. Gold is a physical asset with intrinsic value, while Bitcoin is a digital asset whose value is derived from speculation and the perceived scarcity enforced by its code. Both rely on the devaluation of fiat currencies to bolster their price, a dynamic that has been particularly pronounced since the U.S. Abandoned the gold standard in 1971. The price of gold has largely tracked the increase in the money supply since then, serving as a hedge against inflation.
However, recent analysis of the Bitcoin-to-gold price ratio suggests a potential reversal of this trend. A key green trend line that had supported Bitcoin’s outperformance over gold for three years gave way late last year, signaling a possible shift in momentum. The ratio is now testing a longer-term red trend line, which analysts believe has a stronger chance of providing support. This technical indicator suggests a potential bottoming out for the ratio, but caution is advised.
Adding to this analysis is the identification of a head and shoulders pattern in the ratio. The distance from the “head” to the “neckline” of this pattern indicates a potential decline and the ratio has now reached its target based on this formation. However, technical indicators such as the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and the 100-day Rate of Change (ROC) are all currently indicating oversold conditions, suggesting a possible rebound.
The inherent volatility of both gold and Bitcoin necessitates a cautious approach to any potential swap. While the technical indicators point to a possible reversal, the underlying narrative of dollar debasement remains strong, and the divergence between the two assets could persist. Investors considering a shift from gold to Bitcoin should carefully weigh the risks and potential rewards.
What To Watch Today
Earnings
Economy
Market Trading Update
Yesterday, the markets were closed in observance of Presidents’ Day. The S&P 500 continues to face resistance at previous all-time highs, exhibiting signs of distribution. Price action last week indicated a potential shift in momentum, with a failure to sustain gains and a subsequent selloff. The index closed Friday at 6,836.17, with the overall pattern suggesting a corrective bounce rather than a sustained upward trend.
Key support levels currently sit around 6,790 to 6,825, while resistance is seen at 6,894 and 6,914. A break below the support level could lead to further declines, while a reclaim of the resistance area could signal a resumption of the upward trend. Volatility remains elevated, and investors should remain cautious.
| Support Or Resistance | Price Level | Description |
|---|---|---|
| Support | 6,790 to 6,825 | Prior swing low reference. The next downside target is 6,790 if it breaks. |
| Support | 6,812 | 100-Day Moving Average |
| Support | 6,550 | Larger swing low reference. Downside magnet if support fails. 200-DMA is the last line of defense at 6,504. |
| Resistance | 6,894 | 50-DMA that was broken on Thursday |
| Resistance | 6,914 | 20-DMA was broken on Thursday |
| Resistance | 6,980 to 7,000 | Weekly high area and psychological ceiling. |
The Week Ahead & CPI
CPI data released this week came in slightly better than expected, with the monthly core CPI rate at 0.3% and the inclusive CPI at 0.2%. The year-over-year CPI rate fell to 2.4% from 2.7% last month. This suggests a potential easing of inflationary pressures, which could influence the Federal Reserve’s monetary policy decisions. The economic calendar is relatively quiet this week, with the FOMC minutes on Wednesday and PCE Prices released on Friday.
Financial Nihilism & The Trap Young People Are Walking Into
A recent article in the Wall Street Journal discusses the rise of “financial nihilism” among Gen Z, characterized by a belief that financial decisions are meaningless due to systemic issues. However, data suggests that Gen Z and Millennials are actively investing in traditional financial products, including low-cost ETFs and index funds, and are contributing to retirement plans at earlier ages. This contradicts the notion of widespread financial despair and suggests a more pragmatic approach to long-term financial planning.
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