Bitcoin (BTC) has fallen to one of its lowest relative valuations against gold (XAU) in January, according to recent data, prompting analysts to argue that BTC may now present a more compelling long-term opportunity than during the period preceding the 2015–2017 bull cycle.
BTC-to-Gold Ratio Hits Historical Extremes
Data shared by Bitwise Europe shows that Bitcoin’s value relative to gold, adjusted for global money supply, has dropped to an all-time low. This ratio is commonly used to assess whether Bitcoin is historically “overvalued” or “undervalued” compared to gold.
The indicator has now moved close to the -2 extreme zone, a level that has historically coincided with major Bitcoin market bottoms. The last comparable occurrence was in 2015, when BTC was significantly undervalued relative to gold. In the two years that followed, Bitcoin surged approximately 11,800%, rising from around $165 to nearly $20,000.
Crypto analyst Michaël van de Poppe noted that current conditions resemble prior periods where Bitcoin was deeply discounted relative to hard assets, increasing the probability of a long-term reversion.
Potential Capital Rotation From Gold to Bitcoin
Several analysts believe a partial rotation of capital from gold into Bitcoin could emerge later this year. André Dragosch, Head of Research at Bitwise Europe, alongside Pav Hundal, Chief Analyst at Swyftx, have suggested that such a transition could begin as early as February or March, though not necessarily in a rapid or aggressive manner.
This thesis comes as gold prices have nearly doubled year-over-year, while Bitcoin has declined by approximately 18% over the same period, creating a notable valuation divergence between the two assets.
Skepticism Remains on Timing
Not all market participants are convinced that a near-term rotation is imminent. Analyst Benjamin Cowen cautioned that Bitcoin could continue to underperform relative to equities, and that expectations of a swift capital shift away from gold and silver may be premature.
Meanwhile, Citi has projected continued strength in silver due to rising demand from China and a weakening U.S. dollar, while RBC Capital Markets has forecast that gold prices could reach $7,000 by the end of 2026, underscoring the ongoing appeal of precious metals.
Cowen emphasized that even if a rotation occurs, it is unlikely to happen quickly, suggesting a more gradual reallocation over time.
Long-Term Bitcoin Holders Resume Accumulation
Despite January’s sharp correction, on-chain data indicates growing confidence among long-term Bitcoin holders (LTHs). Supply held by entities that have not moved BTC for over 155 days has begun to recover during the recent sell-off.
Additionally, the LTH Spent Binary indicator, which tracks whether long-term holders are distributing or holding, continues to trend lower — signaling declining sell pressure from this cohort.
According to analyst Anil, past market cycles show that a combination of rising LTH supply and falling LTH Spent Binary often precedes the formation of sustainable market bottoms. A similar pattern was observed after the April 2025 low, where Bitcoin later rebounded nearly 60% from its trough.
Market Outlook
Taken together, the convergence of historical valuation metrics, capital flow narratives, and long-term holder behavior suggests that patient investors may be using recent weakness to rebalance positions, potentially laying the groundwork for future price stability and growth.
However, analysts broadly agree that any structural shift between gold and Bitcoin is likely to unfold gradually, rather than through an abrupt reallocation of capital.
Disclaimer: This article is for informational purposes only and reflects a personal blog-style market analysis. It does not constitute financial or investment advice. Readers should conduct their own research and are solely responsible for their investment decisions.
👉 Follow for more data-driven crypto market insights and macro-level analysis.