(Kitco News) – For the first time since its launch on January of 2009, Bitcoin (BTC) has taken a back seat to gold in terms of performance, as the yellow metal has established record high after record high in recent months while BTC stagnated. But according to one analyst, that will soon change, resulting in a four-fold increase in the BTC/GLD ratio in 2025.
“When I look at [the] chart of Bitcoin/Gold ratio, here is how I view it,” tweeted legendary trader Peter Brandt.
From a technical perspective, Brandt highlighted a “Continuation [of the] inverted Head and Shoulders pattern” with a “neckline at 32.5 to 1,” noted that the “Left shoulder [fell to a] low at 14.2 to 1,” and pointed out that the “Right shoulder [is] forming [a] flag [formation].”
An inverse head-and-shoulders (IH&S) technical pattern is considered a strong bullish signal. This pattern forms when a price chart creates three consecutive troughs, with the middle one, which is called the head, being deeper than the other two shoulders. When the price breaks above the neckline, what follows is often a big rally.
Brandt warned that while the ratio has the potential to “decline into [the] high teens to 1,” after that, Bitcoin is expected to outperform, with Brandt providing a “Target of 123 to 1.”
Data provided by TradingView shows that the current ratio sits at 24.
BTC/GLD 1-day chart by TradingView
At a ratio of 24:1, a spike to 123:1 would represent a 413% increase in the BTC/GLD ratio. With gold currently trading at $2,654.60, if its price held steady until that ratio was achieved, that would put the Bitcoin price above $262,000.
Popular Bitcoin analyst Willy Woo responded to Brandt’s tweet by noting that it’s “Incredible how this chart looks almost the same as BTCUSD. It’s like Gold doesn’t even go up when compared to BTC.”
“@PeterSchiff, please help me understand,” Woo added, poking fun at the noted gold bull and Bitcoin detractor.
As for what could help propel Bitcoin to new highs in terms of price and BTC/GLD ratio, X user Bitcoinsensus pointed to the M2 money supply, which has surged higher over the past two and a half months.
The Global M2 money supply by a 10 week lead is exploding to the upside.
It is just a matter of time before #Bitcoin follows? pic.twitter.com/SB2TwCG1eZ— Bitcoinsensus (@Bitcoinsensus) September 25, 2024
“As global liquidity expands, Bitcoin tends to thrive,” wrote Lyn Alden. “Conversely, when liquidity contracts, Bitcoin tends to suffer. This dynamic has led some to refer to Bitcoin as a ‘liquidity barometer.’”
“Similarly, comparing the year-over-year percent changes of Bitcoin and global liquidity also highlights how closely the two appear to move in tandem, with Bitcoin’s price rising when liquidity increases and declining when liquidity falls,” she added.
With the Federal Reserve recently announcing a 50 basis point rate cut and signaling additional cuts in 2024 and more in 2025, global liquidity and M2 money supply are predicted to increase, which is expected to boost the price of Bitcoin.
According to data from Trading Economics, M2 money supply has shown consistent month-on-month growth, a trend that began in February 2024. This rise in the money supply has been crucial in supporting asset prices, with stocks and gold setting multiple record highs in recent months.
US money supply M2. Source: Trading Economics
From gold to stocks and Bitcoin, a correlation with monetary measures like M2 highlights how liquidity remains a key driver of asset performance in today’s economy. As long as central banks continue to provide support via lower interest rates and quantitative easing, financial markets are expected to push higher, though the sustainability of this trend remains a question for the future.
According to TradingView analyst Xanrox, “Bitcoin currently provides a lifetime opportunity for all investors and traders.”
“100% - 80% profit by the end of the year is extremely realistic,” he added. “The bullish flag is coming to an end and we will see a tremendous pump as always. Do not forget that once Bitcoin starts pumping, there will be no time to enter as no pullbacks are expected!”
As for good areas to consider taking profits, Xanrox said, “You definitely want to take profit at the top of the long-term trendline (2017 - 2021 - 2025). If you don't want to use this trendline as a profit target, there is another option: Fibonacci extension. You want to focus on 1:1, 1.382, and 1.618 FIB extension levels.”
