This article compares Bitcoin and gold as inflation hedges amidst rising geopolitical tensions and liquidity surges. Bitcoin has surged to $86,000, influenced by the US tariff pause under Trump, while gold reaches record highs as a safe-haven asset amid ongoing trade uncertainties. Historical correlations between the M2 money supply and asset prices are examined, alongside trends indicating potential bullish patterns for both assets.
Bitcoin (BTC) has recently rebounded to approximately $86,000 following President Donald Trump’s announcement regarding a pause on auto tariffs. The alleviation of tariff concerns, particularly those affecting electronics, has boosted market confidence. Nonetheless, uncertainties persist as the United States continues to impose substantial tariffs on Chinese imports, and trade tensions remain heightened. This climate of uncertainty is contributing to a cautious market outlook despite short-term optimism.
Gold (XAU), often viewed as a safe-haven asset during times of market turbulence, has also benefited from these uncertainties. With ongoing trade tensions, gold continues to draw investor interest, demonstrating resilience as fears of a global trade war rise. This article will examine how global liquidity, changing trade policies, and market sentiment contribute to the upward trends of both Bitcoin and gold.
Bitcoin’s recovery from a strong support level of $75,000 corresponds with a notable increase in the global M2 money supply, which reached $90.21 trillion as of February 2025. Historically, both Bitcoin and gold have shown strong correlations with increases in money supply, as evidenced by Bitcoin’s surge from $10,000 to $60,000 during the liquidity expansion in early 2020. Similarly, Bitcoin rallied alongside M2 growth in October 2024. This relationship underscores the importance of liquidity in bolstering asset prices, giving Bitcoin and gold positive momentum.
Gold has reached a new record high of $3,350, responding directly to expanding liquidity. Should this trend continue, Bitcoin could also see gains. Recent data, as of April 15, 2025, indicated Bitcoin recorded a net inflow of $76.40 million, with total net assets at $74.88 billion. Historically, high inflows may lead to selling pressure as traders deposit coins into exchanges, indicating potential profit-taking or fear-driven sales. However, ongoing liquidity and economic uncertainty may still signal a bullish outlook for Bitcoin.
The correlation between Bitcoin and gold prices, as illustrated in recent charts, shows that while gold has maintained a steady upward trajectory, Bitcoin remains highly volatile. The correlation coefficient varies between positive and negative factors, signifying an unstable relationship. Both assets exhibited a positive correlation in late 2024, yet early 2025 showed opposing movements, further complicating their dynamic relationship, where Bitcoin’s safe-haven status fluctuates.
Analysis of the BTC-to-Gold ratio shows a recent decline after previously establishing a strong pivot, yet long-term trends remain bullish as this ratio displays an inverted head and shoulders pattern from 2016, with significant lows recorded in 2020 and 2023. Historical trends suggest that a breakout above the 40 level could indicate potential surges in Bitcoin prices.
Moreover, the weekly chart also depicts bullish momentum in the BTC-to-Gold ratio, presenting a cup and handle pattern within a triangular formation since 2022. A move above the 40 level is deemed a strong bullish indication for Bitcoin. As this correction concludes, Bitcoin is poised for a notable buying opportunity, particularly if the ratio touches the 20 mark, potentially signalling gold’s peak and Bitcoin’s ascent.
A recent analysis of Bitcoin’s weekly chart shows a reversal from a long-term support zone between $65,000 and $75,000, which positions the market favourably for an upward rally. The reversal has driven Bitcoin’s price up to $85,000, with a bullish hammer candle confirming robust buying interest. This pattern suggests the possibility of a rally toward the pivotal $105,000 level, affirming a bullish trend as prices break from a cup pattern.
In contrast, gold’s weekly chart indicates a strong hammer candle forming in an overbought area, signalling its continuation of a parabolic trend. High volatility persists as prices ascend, with substantial liquidity and economic uncertainties shaped by tariff concerns underpinning this upward momentum.
Muhammad Umair, an MBA in finance and a PhD in engineering, leverages his interdisciplinary expertise as a financial analyst. Founder of Gold Predictors, he leads a team providing in-depth market analytics and refined strategies for trading currencies and precious metals.
