Bitcoin vs. Gold: Bloomberg Analyst Warns of Increased Downside for BTC

Bitcoin’s Declining Strength Against Gold

Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, has raised concerns about Bitcoin’s (BTC) performance relative to gold. On October 18, McGlone observed via X (formerly Twitter) that the BTC-to-gold ratio has broken below a key upward trendline established since its 2022 lows. This technical breakdown could indicate heightened risks of Bitcoin continuing to underperform compared to traditional safe-haven assets like gold.

According to McGlone: “Bitcoin May Be Failing vs. Gold – A top leading indicator — the Bitcoin/Gold cross — may have breached its uptrend line from the 2022 trough, with trickle-down implications.” McGlone also referenced a detailed report available via Bloomberg Terminal discussing the significant implications of this development.

Gold’s Exceptional Rally Driven by Safe-Haven Demand

Gold has been on a remarkable rally this year, surpassing $4,300 per ounce, which marks its strongest annual performance since 1979. Several factors have fueled this surge, including escalating gold acquisitions by central banks, concerns over global inflation, the declining purchasing power of fiat currencies, and geopolitical uncertainties driving demand for reliable safe-haven assets.

Central banks worldwide have intensified their gold purchasing strategies amid economic instability, bolstering gold’s position even further. This surge signals that investors are increasingly turning to gold as a hedge against inflation and currency depreciation—a trend that has only amplified during recent geopolitical tensions.

Bitcoin Struggles as Market Correlations Persist

In stark contrast, Bitcoin’s performance has faltered amid broader macroeconomic challenges such as ongoing U.S.-China trade disputes and regional banking instability in the United States. Despite being initially touted as a "digital gold" capable of insulating investors from economic turmoil, Bitcoin has shown significant correlation to equity markets, often following their downturns.

Bitcoin has also underperformed prominent benchmarks like the S&P 500 Index, raising questions about its viability as a safe-haven asset. Market analysts note that Bitcoin’s price volatility remains a major concern, particularly as geopolitical tensions and macroeconomic challenges push traditional investors toward more stable assets like gold.

McGlone’s Perspective: Shift From Bitcoin Bull to Bear

Mike McGlone, once a strong Bitcoin advocate, has sharply revised his outlook on the cryptocurrency over the past year. Now favoring gold, McGlone has repeatedly cautioned that Bitcoin may experience steep declines relative to gold. He has previously suggested that Bitcoin could lose as much as 50% of its value against gold.

In the past, McGlone predicted that Bitcoin could ultimately fall to $10,000—a forecast that was met with skepticism from market participants. So far, Bitcoin has defied this pessimistic prediction, yet mounting challenges indicate that its outlook against gold remains precarious.

Conclusion: Bitcoin Faces Tough Competition From Gold

As gold gains strength amid global economic uncertainties and central bank purchases, Bitcoin appears increasingly vulnerable to downside risks. The breakdown of the BTC-to-gold ratio’s upward trendline signals potential trouble for digital assets struggling to meet expectations as safe-haven investments.

McGlone’s cautionary stance underscores the growing preference among investors for gold's stability over Bitcoin’s volatility. Whether Bitcoin can overcome macroeconomic headwinds and reclaim its appeal as a hedge remains uncertain, but the challenges posed by gold’s soaring demand create stiff competition for the world’s first cryptocurrency.