The BTC/XAU ratio has fallen to around 20 ounces of gold per bitcoin (CRYPTO:BTC), marking its weakest level since early 2024 and renewing questions over Bitcoin’s near-term direction.
Market participants view the move as significant because it coincides with gold trading close to historic highs amid persistent global uncertainty.
The ratio measures how many ounces of gold are required to purchase one bitcoin and is often used to assess relative strength between the two assets.
Analysts say the latest decline suggests Bitcoin is underperforming gold at a time when investors are favouring traditional stores of value.
Technical traders note that the breach of the 20-ounce level has previously aligned with important turning points in broader market cycles.
The last time the markets hit their bottom was also when the BTC/USD ratio against gold reached a low. One of the two is overvalued. The other is undervalued.
van de Poppe said.
He argued that current conditions point to gold being overextended while Bitcoin may be approaching a potential accumulation zone.
Supporting this view, the weekly relative strength index on the BTC/XAU ratio has dropped to roughly 29.5, placing it firmly in oversold territory.
Chart watchers also highlight a bullish divergence on the daily timeframe, where momentum indicators are rising even as prices continue to weaken.
Similar technical patterns were observed during previous Bitcoin bear markets before notable rebounds occurred.
Proponents of this outlook believe the ratio’s weakness reflects exhaustion rather than the start of a prolonged decline.
Other analysts, however, warn that the signal could point to deeper structural challenges for Bitcoin relative to gold.
The last bitcoin bear market officially began when we lost this support.
Wealthmanager said.
He described the 20-ounce threshold as a symbolic dividing line between bullish and bearish regimes.
According to his assessment, consolidation is likely in the near term, but a decisive move could follow within weeks.
Trader Ted Pillows added that the ratio has broken below a long-term upward trend visible on higher-timeframe charts.
He suggested this breakdown could usher in a phase of sustained underperformance for Bitcoin compared with gold.
Analysts link this shift to gold’s resilience as investors seek stability during periods of geopolitical and economic strain.
Persistent inflation concerns and cautious risk appetite have continued to support demand for the precious metal.
At the same time, tighter monetary conditions in the United States are seen as limiting speculative inflows into cryptocurrencies.
Slower liquidity growth has weighed on Bitcoin’s momentum despite ongoing interest in digital assets.
Some strategists argue that if gold remains elevated, Bitcoin may struggle to reclaim relative strength quickly.
Others counter that prolonged weakness could attract long-term buyers betting on a cyclical recovery.
The coming weeks are expected to be critical in determining whether the ratio stabilises or breaks lower.
Observers say movements in the BTC/XAU ratio will offer insight into shifting investor preferences between risk assets and traditional hedges.
At the time of reporting, Bitcoin price was $87,662.65.