Does The Gold Rally Really Hold Back Bitcoin?

Between bitcoin and gold, the war is declared. Which of the two will emerge victorious? Opinions differ. Analysts, however, highlight an interesting correlation: when the yellow metal surges, BTC tends to stagnate or even decline. This observation leads us to believe that a slowdown in the gold rally could provide bitcoin the opportunity to reach new historical highs.

Gold in the lead, but for how long?

For several months now, the gold market has been breaking records, peaking at over $2,700 an ounce – whereas at the end of August it was at $2,500, an impressive increase of 37% this year. This resurgence in popularity is accompanied by significant investment flows: over one million ounces have been injected into ETFs in just seven days, a first since October 2022.

This phenomenon oddly recalls the situation in 2020, when the precious metal led the dance before making way for the flagship cryptocurrency.

• Gold ETFs welcomed over 1 million ounces in seven days;
• 37% increase in gold prices in 2024;
• The price of Bitcoin (BTC) has stagnated between $50,000 and $70,000 during the same period.

It is therefore legitimate to wonder if history will not repeat itself: could a fatigue in gold herald an imminent explosion of BTC?

Bitcoin traders watch the evolution of the yellow metal

For BTC traders, the performance of gold should be watched closely. Indeed, indices show that both assets tend to evolve in a staggered fashion. While the price of bitcoin remains confined within a relatively wide range of $50,000 to $70,000, gold continues to attract with significant inflows into ETFs, especially via SPDR Gold Shares.

“As long as gold doesn’t slow down, BTC may well remain sidelined,” estimates an analyst.

On the other hand, bitcoin ETFs are also recording encouraging figures: $2 billion in net inflows in just one week. However, the momentum still seems insufficient to counter the euphoria surrounding the precious metal.

Speculation is rampant, with some betting on a turnaround after the American elections.

For the time being, gold benefits from multiple supports, including Iran-Israel tensions, which raise concerns about increased volatility for bitcoin in the face of the yellow metal.