Gold’s longest losing streak in a century meets bitcoin’s resurgence

As gold posts its worst run since 1920, bitcoin gains ground and outperforms, pushing the BTC to gold ratio 30% higher, since the Middle East conflict started.

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What to know:

• Gold has dropped as much as 27% from its January peak and is down around 12% since late February, marking its longest losing streak in over 100 years.
• Bitcoin is holding above $70,000, driving the BTC to gold ratio up roughly 30% from recent lows, signaling renewed relative strength

Gold is currently on its longest losing streak in over a century, its worst run since February 1920, lasting 10 consecutive days, according to Katie Greifeld, Bloomberg analyst.

The yellow metal has fallen as much as 27% from its January all time high, dropping to a low of $4,090, where it found support at its 200 day moving average, a widely watched technical level that often signals longer term trend strength.

However, it has rebounded by around 2% over the past 24 hours, likely signaling the end of the streak. Since the escalation of the Middle East conflict at the end of February, gold remains down roughly 12%.

Meanwhile, bitcoin, often referred to as digital gold, is holding above $70,000, keeping the bitcoin to gold ratio just below 16 ounces. The ratio bottomed at around 12 ounces just before the Middle East conflict, meaning the ratio has risen roughly 30% from those lows, with bitcoin outperforming.

Charlie Morris, chief investment officer at ByteTree, noted: “I remember the excitement when 1 BTC first surpassed one ounce of gold in March 2017. Since then, it has consistently built higher lows, reaching 2.7 oz in 2019, 3.4 oz during the 2020 pandemic crash, 9.1 oz after the FTX collapse, and 12.4 oz in February this year. Now, one BTC is worth 16 ounces of gold. With gold appearing exhausted, we could reasonably expect a new all time high above 40 ounces in the coming months or years.”

Historically, bitcoin has tended to lag gold in market cycles. Gold typically leads with an initial rally, then consolidates, allowing bitcoin to catch up and outperform.

While, Bloomberg ETF analyst Eric Balchunas argues that bitcoin and gold are not inversely correlated, but rather largely uncorrelated.

He highlights that gold exchange traded funds (ETFs) such as SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) have seen billions of dollars in outflows over the past week.

In contrast, bitcoin ETFs have recorded around $2.5 billion in inflows this month, with only about $140 million in net outflows year to date, despite bitcoin being down roughly 20% over that period.

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