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Bitcoin is declining compared to gold’s historic surge, but a “power law” shift suggests a potential rebound to $324k.
I often contemplate the type of individual who possesses a small amount of Bitcoin set aside for the future, alongside a bit of gold reserved from the past.
These individuals tend to be composed; they do not engage with sensational headlines, remain indifferent to daily fluctuations, and simply desire something stable on both sides of the financial spectrum. For years, this approach seemed logical, as Bitcoin’s long-term trajectory against gold appeared to be a one-directional journey, accumulating more ounces over time and minimizing regrets.
Then January arrived.
Gold surged. Bitcoin did not.
Gold approached record levels, teasing the $4,900 per ounce mark, driven by the type of unease that arises when geopolitical situations become unpredictable, and bond markets begin to exhibit their own volatility, as gold observers noted this week.
In contrast, Bitcoin remained confined within a narrow range around $89,800.
This disparity encapsulates the entire narrative.
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The ratio that got people’s attention
If there is one figure that encapsulates the current situation, it’s Bitcoin’s value in terms of gold.
By dividing Bitcoin’s price in dollars by the price of gold per ounce, you can determine how many ounces one BTC can purchase. When gold skyrockets while Bitcoin remains stagnant, that ratio declines rapidly.
This is why the “BTC/Gold power law” chart is gaining traction, and why analysts like Plan C are labeling it a significant deviation and suggesting a major mean reversion is on the horizon.
Bitcoin priced in gold (Source: @sminston_with)
The straightforward interpretation of this argument is clear. Those who think in terms of models believe Bitcoin has a long-term “trajectory” against gold, and that the market has strayed far from it. The more technical interpretation involves a power-law corridor with quantile bands, popularized in various formats by model creators and trackers, such as power-law dashboards.
Regardless, the emotional impact remains the same. Many long-term Bitcoin holders have not witnessed gold “triumph” like this in quite some time.
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The reasoning behind gold’s current performance
Gold is no longer behaving like a sluggish hedge. Major banks are perceiving this movement as having lasting potential.
Goldman Sachs recently increased its end-of-2026 prediction to $5,400 an ounce, up from $4,900, citing a new surge in private demand and a consistent influence from central banks.
One detail is more significant than it may appear. Gold is achieving this while real yields remain significantly positive. The 10-year TIPS yield was approximately 1.94% on January 22.
10-year TIPS yield (Source: Trading Economics)
This is not typically advantageous for a metal that yields no return, yet it continues to rise. When this occurs, it usually indicates that the buyer is not sensitive to price.
Bitcoin, at this moment, doesn’t require a complex explanation. It has been patiently waiting.
This waiting is evident in the flows. U.S.-listed spot Bitcoin ETFs experienced around $1.1 billion in outflows over three trading days ending January 8, and another $1.5 billion this week, erasing early gains of the year.
This does not imply that institutions have “disappeared”; it indicates that the marginal buyer has been inconsistent, and this market remains reliant on timing and sentiment more than gold does.
Thus, Bitcoin stands at $89,873, while gold hovers near $4,900, and the ratio appears to be a trapdoor opening beneath the previous narrative.
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The trade everyone is subtly analyzing
The simplest way to grasp the mean reversion scenario is to momentarily set aside dollar-based thinking.
If gold maintains its position near $4,900 and the BTC/Gold ratio rebounds towards the midpoint of the historical corridor anticipated by power law proponents, Bitcoin’s dollar value would rise almost automatically.
Here are the fundamental “if this, then that” figures, assuming gold is around $4,900 per ounce.
If the ratio remains approximately 18.5, Bitcoin hovers near $90,000; that reflects our current reality.
If the ratio increases to about 35, Bitcoin would settle at around $171,000.
If the ratio climbs to between 45 and 60, Bitcoin would reach approximately $220,000 to $294,000.
| Gold price (USD/oz) | BTC/Gold ratio (oz per BTC) | Implied BTC price (USD) | What this scenario implies |
|---|---|---|---|
| $4,900 | 18.5 | $90,650 | Status quo, BTC remains near current levels |
| $4,900 | 35 | $171,500 | Mean reversion toward “mid-band” levels |
| $4,900 | 45 | $220,500 | Stronger recovery, BTC catches up while gold remains stable |
| $4,900 | 60 | $294,000 | Upper-tail move, the “$200k–$300k” discussion |
| $5,400 | 35 | $189,000 | Gold increases, ratio normalizes, BTC recalibrates upwards |
| $5,400 | 60 | $324,000 | Gold rises and BTC/Gold mean reverts significantly |
Notes: the ratio represents ounces of gold per 1 BTC, and the implied BTC price = (gold price per oz) × (BTC/Gold ratio).
When combined with Goldman’s $5,400 gold projection for the end of 2026, the calculations become more pronounced, estimating between $189,000 and $324,000, depending on how much the ratio rises.
These figures do not forecast anything specific, but they express the bet in straightforward terms. The bet is that gold’s strength renders Bitcoin’s underperformance as “too extreme,” and the rebound could be abrupt.
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The aspect model enthusiasts prefer to overlook
A model can be valuable without serving as a predictive guide to the future.
Power law corridors appear neat on logarithmic charts, and Bitcoin is a chart-friendly asset; it has generally trended positively throughout its existence. This makes any long-term fit seem compelling, especially if the inquiry is “does this typically appreciate over time?”
Therefore, the crucial question is not whether the chart appears favorable; it undoubtedly does. The question is: what kind of environment are we entering?
Gold’s demand appears different when it maintains strength alongside positive real yields, as indicated by the real-yield print. It appears different when major banks continue to raise their targets, as the upgrades suggest. It looks different when headlines about market stress become the routine backdrop.
In such a scenario, Bitcoin may still perform well in dollar terms while continuing to lag behind gold longer than traders would prefer.
What to monitor next, if you wish to discern which narrative is prevailing
This evolves into a narrative centered on a few straightforward indicators.
- Gold maintaining its position near highs while real yields remain robust, suggesting structural demand and moving away from a rapid cooldown. This can be monitored through the same TIPS series and gold spot updates like the reports from Mining.com.
- Bitcoin ETF flows stabilizing after the early January withdrawals, indicating a potential shift back into BTC; the easiest public insight is the dashboard.
- Bitcoin breaking free from the $89,800 stagnation, as currently, the market is still awaiting a catalyst to move.
When people assert “Bitcoin is undervalued in terms of gold,” they are essentially conveying something more nuanced.
They imply that they anticipated Bitcoin to emerge as the hard asset that dominates the decade, and presently, gold is behaving as if it desires that title back.
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This is why some perceive this as a black swan; the chart serves as the rationale, while the emotion is the unexpected element.
- If gold’s rally subsides and Bitcoin awakens, the mean-reversion trade could transform into a narrative recounted for years, marking the moment BTC holders regained their confidence and gold buyers hesitated.
- If gold maintains its dominance, this narrative shifts to one where the market determines that hard money signifies something older, quieter, and easier for institutions to hold without hesitation.
In any case, the BTC/Gold ratio is performing as an effective relative metric should: it compels you to stop fixating on a single price and start questioning who is currently winning the “hard asset” battle and why.
The post Bitcoin is bleeding against gold’s record breakout but a “power law” slip hints at a $324k price snapback appeared first on CryptoSlate.
