Gold's Record Run Leaves Bitcoin Behind in Latest Bear Market Test

Bitcoin is struggling against gold once again, marking a challenging period for the “digital gold” narrative. While gold has climbed to fresh record highs just shy of $4,900 per ounce and posted roughly 12% gains year-to-date, bitcoin remains stuck below $89,000, posting only marginal gains despite mounting institutional adoption rhetoric. The divergence between these two stores of value has become impossible to ignore—especially considering gold’s sustained rally is happening alongside a bear market environment for cryptocurrency’s flagship asset.

The most striking metric is the BTC-to-gold ratio, currently hovering near 18.46—a level that sits approximately 17% below its 200-week moving average of 21.90. This technical breakdown tells a story familiar to long-time bitcoin holders: when the ratio dips significantly below its long-term average, extended underperformance typically follows. The current deterioration began in November, and if historical patterns hold, bitcoin could remain pressured against gold well into late 2026.

The Widening Gap: When Gold Outperforms Bitcoin

Comparing performance across various timeframes reveals how decisively gold has outpaced bitcoin. Over a five-year span, bitcoin has delivered approximately 150% returns, while gold has risen roughly 160%—a remarkable feat given traditional narratives positioning cryptocurrency as the superior long-term store of value. This performance gap extends across one-year and five-year comparisons, consistently favoring the yellow metal.

December 2024 marked a critical inflection point. Bitcoin’s ratio against gold peaked near 40.9 that month, but the subsequent decline has been severe. Since that December peak, bitcoin has fallen roughly 55% in relative terms against gold—a significant drawdown, yet still milder than the extreme bear markets of previous cycles.

Bear Market Precedents: How Severe Could Bitcoin’s Fall Get?

History offers sobering context for bitcoin investors watching this unfold. The 2022 bear market saw the BTC-to-gold ratio plummet more than 30% below its 200WMA, a condition that persisted for over a year. The situation in 2017-2018 proved even more devastating, with an 84% relative decline against gold. The 2022 cycle saw a 77% drawdown by comparison.

Current positioning suggests room for further deterioration. With the ratio now 17% below its long-term average—far less extreme than previous cycles—the technical setup implies bitcoin could remain under pressure against gold for an extended period if historical mean reversion patterns repeat.

Broader Market Signals: Risk-Off Sentiment Dominates

Beyond the Bitcoin-gold dynamic, broader market indicators confirm a cautious environment. The CoinDesk 20 index dropped as investors rotated into safe-haven assets, with crypto derivatives markets showing declining open interest and mounting defensive positioning. Traders have increased allocations to protective puts and short positions, signaling expectations for further downside risk.

Even positive development announcements have struggled to inspire confidence. Optimism’s community greenlit a 12-month buyback initiative using roughly half of Superchain revenues to support the OP token, yet the token declined nonetheless—a sign that sentiment currently overshadows structural catalysts.

The Digital Gold Narrative Under Pressure

Bitcoin’s positioning as “digital gold” has long been central to its value proposition. Yet during periods of gold strength and risk aversion, this thesis faces its most stringent test. When traditional gold is delivering superior returns and providing more reliable portfolio hedge properties, the differentiation argument weakens considerably. Whether bitcoin can reclaim this narrative during the next risk-on cycle remains an open question that the market will ultimately answer through price action and relative performance metrics.