The growing concerns surrounding a potential US-driven trade war have provided an opportunity for gold (XAU) to outshine Bitcoin (BTC), pushing the Bitcoin-to-gold ratio to its lowest point in over 12 weeks. As gold continues to solidify its reputation as a safe-haven asset, Bitcoin struggles to maintain upward momentum.
Bitcoin-Gold Ratio Drops to 12-Week Low
Data from TradingView shows that the ratio between Bitcoin’s price in US dollars and gold’s per-ounce price has fallen to 34, marking its lowest level since November 14, 2024. This represents a 15.4% decline from December, when the ratio peaked at over 40.
Gold’s Resurgence Driven by Multiple Factors
The surge in gold’s value can be attributed to several interconnected factors. Year-to-date, gold’s price has risen by approximately 10%, reaching an all-time high of $2,877 per ounce. The ongoing trade tensions between the US and China have further intensified investor demand for gold, with many seeking the metal as a secure investment amid growing uncertainty.
Additionally, China’s demand for gold has increased, fueled by the upcoming Spring Festival holidays. This surge in demand has further strained gold’s supply, contributing to its rising price.
Supply Pressure and Increased Gold Deliveries
The gold market has also been affected by rising tariffs on metal products, particularly impacting futures prices. Gold futures on the Comex exchange have been trading significantly higher than spot prices, prompting an increase in the delivery of physical gold to the US.
Investment banking giant JPMorgan has joined the trend, announcing plans to deliver $4 billion worth of gold bullion to New York in February, signaling strong institutional interest in the asset.
Bitcoin Struggles Despite ETF Inflows
In contrast to gold, Bitcoin’s price has remained relatively stagnant, despite significant capital inflows into US-listed Bitcoin exchange-traded funds (ETFs). These ETFs have seen over $4 billion in investments within the past three weeks. However, experts suggest that this capital may be largely driven by arbitrage trading rather than genuine long-term demand for Bitcoin.
While the Bitcoin ETF inflows have been substantial, analysts believe they have not had a significant impact on Bitcoin’s value, pointing to a lack of sustained investor interest in the cryptocurrency at this time.
Conclusion
As gold continues to shine amidst rising global uncertainties and growing demand, Bitcoin is facing challenges in gaining momentum. With the Bitcoin-to-gold ratio at its lowest in months, it remains to be seen how both assets will evolve in the coming weeks, especially as geopolitical tensions and market dynamics continue to shape investor behavior.
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