While gold moves at record levels, some indicators suggest that Bitcoin may be significantly undervalued compared to both gold and the global money supply. According to some analysts, the current situation could precede stronger growth.
You might be interested in: How to Choose the Right Exchange for Trading Your Cryptocurrency?
Bitcoin Lags Behind Gold
According to Samson Mow, CEO of Jan3 and a long-time Bitcoin advocate, the cryptocurrency is trading roughly 24 to 66% below its long-term trend when compared to gold’s market capitalization or the global money supply. Gold, on the other hand, may appear overheated according to him, as its price has risen significantly in recent months.
Gold futures with April delivery closed on the last trading day at 5,247.90 USD per ounce, while tokenized gold PAX Gold (PAXG) was trading around 5,400 USD. The sharp price increase, according to Mow, suggests that some capital may have shifted too heavily into gold alone.
Read further: Anycoin review
Indicators Point to Possible Reversal
Mow also points to the Z-score indicator of the Bitcoin/gold ratio, which tracks how far the current value is from its historical average. A value of zero represents the average, positive values indicate above-average valuation, and negative values indicate below-average valuation.
Historical data shows that more significant Bitcoin increases often followed when this indicator fell below -2. Currently, it is moving at approximately -1.24, which according to some analysts may suggest room for further growth. However, as outlets such as Cointelegraph point out, part of the market remains cautious and reminds that the current macroeconomic environment – including higher interest rates and geopolitical uncertainty – may significantly influence further price developments.
Don’t miss out: MadisonSix
