The long-term price trend of Bitcoin (BTC) against gold shows a bullish shift after retracing to a level previously seen in 2017, 2022, and 2023. The potential trend reversal appears alongside what analysts describe as an “opportunity within risk.”
BTC-Gold Ratio Shows Bullish Divergence
MN Capital founder Michaël van de Poppe noted that the Bitcoin-gold ratio is showing strength after forming a bullish divergence with the Relative Strength Index (RSI) on the daily chart.
A bullish divergence occurs when the price forms lower lows while momentum indicators like the RSI form higher lows. The setup indicates a decrease in selling pressure.
In February, the ratio retreated to a key support level near 12-13 that previously acted as resistance in 2017 before becoming support in 2022 and 2023. As a result, the current level may serve as a potential bottom for Bitcoin’s long-term trend against gold.
Another reason for this possibility is the change in Bitcoin and gold exchange-traded fund (ETF) flows over the past month.
For example, the US gold-backed ETF SPDR Gold Shares (GLD) recorded an outflow of $3 billion on March 6. Kobeissi’s letter said:
“This exceeds any previous large daily outflow seen in the last two years by +200%.”
Meanwhile, the 30-day change in Bitcoin ETF flows improved to $906 million in net inflows on March 11, up from an outflow of $1.9 billion the previous month.
Related: Bitcoin Nears $70,000 Range as Fed March Rate Cut Odds Drop Below 1%
Holdings measured in native units show another divergence. The 30-day change in Bitcoin ETF balances improved to 12,909 BTC from -34,197 BTC, while gold ETF holdings fell to approximately 606,850 ounces from 1.4 million ounces on February 13.
Macro creates a window of opportunity for Bitcoin
According to Binance Research, the current macroeconomic volatility may present an “opportunity within the risk” for Bitcoin. The report noted that BTC has moved similarly to macro assets like oil and US stocks amid the war between the US, Israel and Iran, reflecting how global events are currently driving price action.
But capital is starting to return to BTC despite the volatility. The proportion of Bitcoin trading volume coming from US spot ETFs has increased recently, indicating growing institutional activity.
Related: Three Bitcoin Binance Charts Reveal Setup Behind Next Big Move
However, ETFs still represent only about 9% of total BTC spot trading volume, well below the 30-40% ETF trading volume relative to total stocks in US stock markets, suggesting significant room for institutional expansion.
Historically, periods of geopolitical turmoil have also preceded strong recoveries. For example, midterm election years in the United States typically see market declines, with an average drop of 16% between the peak and trough of the S&P 500. While Bitcoin has historically fallen around 56% during those cycles.
However, the 12 months following the midterm elections have never produced a negative S&P 500 performance since 1939, average gains of 19%, and Bitcoin has rallied an average of 54% in the three years following the midterm elections on record.
As Cointelegraph reported, the $78,000 level is now key to a possible broader trend reversal in the BTC market.
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