Author: Yashu Gola, CoinTelegraph; Compiler: Deng Tong, Golden Finance
Bitcoin has historically outperformed gold, most recently by a factor of six.
Gold’s climb to $5,000 could set the stage for a sharp rise in Bitcoin.
A weaker dollar and stronger global liquidity remain key drivers for both assets.
Gold’s approach to $5,000 an ounce and beyond has become a hot topic for hard asset bulls, including Ed Yardeni, head of Yardeni Research, and billionaire investor John Paulson.
But what will happen to the price of Bitcoin, hailed by many as “digital gold,” if the precious metal soars further?
Historically, when Bitcoin and gold markets have risen simultaneously, Bitcoin has far outperformed gold.
Between March 2020 and March 2022, during the Fed’s ultra-easy monetary policy, Bitcoin prices soared by about 1,110%, while gold rose by only 35.5%.
XAU/USD vs. BTC/USD and global M2 supply weekly chart. Source: TradingView
In the rally from November 2022 to November 2023, which coincided with an increase in the global money (M2) supply, gold rose by about 25%, while Bitcoin rose by 150%, a nearly 6x increase.
Gold prices rose from their current price of about $3,265 to $5,000, which would represent a 50% increase. Therefore, if history repeats itself, Bitcoin prices could rise by 300%, or $285,000 per BTC.
This is consistent with the Bitcoin price target predicted by analyst apsk32, which is based on a power law model normalized to gold's market capitalization.
Frank Holmes, CEO of US Global Investors, believes that gold prices will rise to $6,000 during Trump's presidency. He believes that the growth rate of gold prices has lagged behind the surge in the global M2 money supply.
He links this bold goal to Trump's tariff policies, which he believes could cause the dollar to depreciate by about 25%, thereby increasing the attractiveness of gold, as well as strong central bank demand and investor positions.
Holmes predicts that Bitcoin could break out of a $97,000 oversupply and climb to $120,000-150,000 in the short term, with the potential to reach $250,000 in the long term as adoption accelerates.
If gold’s lagged correlation holds, Bitcoin could reach $155,000.
In late April, gold climbed to an all-time high of $3,500, up 33.35% year to date. As of May 5, gold has pulled back slightly to $3,237. In contrast, Bitcoin is up just 0.82% year to date.
BTC/USD and XAU/USD daily chart comparison. Source: TradingView
Some market observers, including analyst Cryptollica, have noted that Bitcoin’s past behavior has lagged that of gold, meaning that if Bitcoin breaks out of its current consolidation range, it could potentially rise to the $155,000 level.
BTC/USD vs. XAU/USD. Source: Cryptollica/X
Bitcoin’s 30% pullback from its all-time high of around $110,00 appears mild compared to past sell-offs of more than 50%. This resilience strengthens its position alongside gold and increases the likelihood that Bitcoin will follow gold’s rise if market conditions improve.
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