When it comes to hedging against inflation, the gold price and Bitcoin are often compared due to their historical roles in protecting value during times of economic uncertainty. Recently, both assets have seen intriguing price movements as they react to global liquidity shifts and changing market conditions. In this blog, we will explore how both Bitcoin (BTC) and gold (XAU) are affected by global economic policies, liquidity trends, and market sentiment, all while drawing comparisons between the two.
Bitcoin’s Resilience Amid Global Liquidity Growth
Bitcoin has recently surged to new heights, recovering to around $86,000. This increase was spurred by a combination of factors, including President Trump’s decision to pause auto tariffs, which helped boost risk appetite among investors. In particular, the relief from tariffs on electronics eased market tensions, although uncertainty remains due to ongoing trade disagreements with China. Despite the relief, U.S. tariffs on Chinese goods still hover at high rates, maintaining a level of caution within the market.
At the same time, gold has experienced similar gains as investors continue to seek it out as a safe-haven asset. As trade tensions persist, both Bitcoin and gold have benefited from an influx of investment seeking to protect against market volatility.
The recent surge in Bitcoin’s price aligns closely with a broader increase in global liquidity. The M2 money supply, which represents the total money supply within an economy, has grown substantially. As of February, it reached a new high of $90.21 trillion. Historically, both Bitcoin and gold have shown a positive correlation with the rising M2 supply. In the first half of 2020, for instance, Bitcoin’s price spiked from $10,000 to $60,000, fueled by a similar liquidity boost from global stimulus measures.
Gold’s response to this liquidity surge has been even more dramatic, with the asset hitting a record high of $3,350. Bitcoin, likewise, shows signs of benefiting from this liquidity boost, potentially leading to further price increases. The growing liquidity in the market signals a possible continuation of the bullish trend for both assets.
Check out this tokenized Gold crypto token by Tether
Gold’s Steady Gains vs. Bitcoin’s Volatility
Gold has long been seen as a stable store of value, with a steady price increase over the years. However, Bitcoin’s journey has been far more volatile. In recent years, Bitcoin has fluctuated wildly in price, but this volatility often works in its favor during times of global uncertainty.
Bitcoin’s price movements tend to be more reactive to broader market sentiment. For example, while gold has been steadily rising, Bitcoin’s correlation with gold has shifted over time. During certain periods, both assets have moved in the same direction, reflecting a positive correlation. However, at other times, the two assets have moved independently of each other, driven by different factors. In early 2025, gold continued to climb while Bitcoin saw a decline, which demonstrated that Bitcoin’s performance isn’t always in lockstep with gold.
Despite this, Bitcoin remains a potential hedge against inflation and a store of value in uncertain times. It is important to note that Bitcoin’s volatility also presents opportunities for those willing to navigate its unpredictable nature.
Bitcoin vs. Gold: The Ratio and Long-Term Trends
A key metric that traders often use to assess the relative performance of Bitcoin and gold is the Bitcoin-to-gold ratio. This ratio compares the value of Bitcoin relative to gold, and it often provides insights into long-term market trends.
Recently, the Bitcoin-to-gold ratio has shown a decline after hitting a strong pivot point. However, the overall long-term trend remains bullish. The ratio has followed a pattern since 2016, with key lows in 2020 and 2023. Historically, this pattern has often preceded strong Bitcoin rallies, with surges seen in 2016 and 2020. A breakout above the 40 mark in this ratio would likely signal a significant rise in Bitcoin’s price, while a drop below the 20 level could indicate a peak for gold.
The bullish momentum in the Bitcoin-to-gold ratio is also supported by a formation of a cup and handle pattern on the weekly chart. This suggests that Bitcoin could soon experience a sharp upward move once the current market correction ends. If Bitcoin reaches the 40 level on this ratio, it could spark a strong rally in the cryptocurrency, further distancing itself from gold’s steady rise.
We have a promotion with Bybit for trading tokenized gold, check it out here.
Technical Analysis: Bitcoin’s Path to Potential Gains
Bitcoin’s recent price action offers clues about where the cryptocurrency might be headed next. The price has shown resilience by bouncing back from a key support zone between $65,000 and $75,000, establishing a solid base for future rallies. This support zone has held firm in recent months, suggesting strong buying interest at these levels.
A bullish reversal from the $75,000 mark has seen Bitcoin rise to $85,000, with a bullish hammer candle forming on the weekly chart. This indicates that buying pressure is likely to continue, pushing Bitcoin toward the $105,000 level. The technical indicators suggest that Bitcoin’s next major move will likely be upward, supported by ongoing global liquidity and market sentiment.
Gold’s Continued Strength: Parabolic Surge
Gold’s price has shown strength in recent months, with a strong hammer candle forming on its weekly chart. This parabolic surge indicates that gold remains in a strong upward trend. Investors continue to view gold as a safe-haven asset amid economic uncertainty, with market volatility only increasing the demand for the precious metal.
While gold’s parabolic rise is impressive, it is important to note that the asset could face increasing volatility in the future. As market conditions shift, gold could experience pullbacks before resuming its upward trajectory. However, the long-term trend remains bullish, driven by strong liquidity and a flight to safety in uncertain times.
Conclusion: Which Asset Is the Better Hedge?
Both Bitcoin and gold have proven themselves to be valuable assets during times of economic uncertainty. Gold has long been seen as a safe-haven investment, offering stability and security for investors. Bitcoin, on the other hand, offers higher volatility but also greater potential for significant returns.
As global liquidity continues to rise and market sentiment remains cautious, both assets are likely to experience continued bullish momentum. Bitcoin’s volatility presents risks, but it also offers potential rewards for investors who can navigate its unpredictable nature. Gold’s steady price increases provide a more reliable store of value, but it may not offer the same upside potential as Bitcoin.
Ultimately, both Bitcoin and gold offer valuable opportunities for investors seeking to hedge against inflation and market volatility. The choice between the two depends largely on individual risk tolerance and investment goals. As the market continues to evolve, both assets will likely play important roles in shaping the financial landscape.
If you enjoyed this blog, check out our curated list of the best crypto casinos.
As always, don’t forget to claim your bonus below by trading gold on Bybit. See you next time!
