Gold Rally Needs to Pause for Bitcoin Price to Break All-Time High, Data Suggests

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Bitcoin (BTC) traders seeking insights into when the world’s largest token might hit new lifetime highs should consider pulling up gold’s price chart on their trading screens. Historical data from 2020 suggests that bitcoin will likely surge to new highs once the yellow metal’s bullish momentum runs out of steam.
BTC, the leading cryptocurrency by market value, has been trading back and forth in a wide range between $50,000 and $70,000 since April, with several crypto-specific and macro factors consistently capping the upside. Meanwhile gold has surged by over 20% during the same time, reaching new record highs above $2,700. The yellow metal is up 37% this year. Silver, for its part, is up 43% this year after almost touching $35 on Tuesday, marking a 12-year high.
The pattern is analogous to 2020 when gold led the rally in bitcoin.
Gold started to move up from $1,450 at the end of 2019, front-running the monetary stimulus by the central banks and the COVID lockdowns, and set a new record high of over $2,000 per ounce in August 2020.
Meanwhile, bitcoin remained flat – apart from its sudden COVID drop – the whole time, hovering just below its the-then record high of $20,000 in one of its longest consolidation periods ever. However, as gold pulled back in late 2020, bitcoin started to run higher – surging from $10,000 to over $60,000 by March 2021. Perhaps a rotation occurred, but nevertheless, bitcoin waited for gold to stop climbing.
So, if the past is a guide, a pause in the gold rally will likely pave the way for stronger demand for BTC. That said, whether history will repeat itself remains uncertain and gold, as of now, shows no signs of uptrend exhaustion or demand slowdown.
According to the bold report, gold’s run has been fueled by inflows into gold ETFs, which on a 7-day basis have hit over 1 million ounces. These are the highest inflow into the ETFs over a 7-day period since October 2022. Most of these inflows were captured by SPDR Gold Shares (GLD), a gold fund – primarily used by U.S. retail investors – which has seen massive accumulation every month since July.
Read more: Bitcoin Isn’t at a Record Like Gold and S&P 500, but an Overlooked Catalyst Suggests a Coming Change
Inflows into spot bitcoin ETFs listed in the U.S. have also picked up. According to Farside data, on Oct. 23, net inflows totaled $192.4 million across all U.S. bitcoin ETF products. iShares Bitcoin Trust (IBIT) saw another massive inflow of $317.5 million, taking its total net inflow to $23.5 billion.
Similarly to the surge in gold ETF inflows, bitcoin ETFs have seen $2 billion in net inflows in the past seven trading days.
However, not all of the inflows are directionally holding; according to Sui Chung, CEO of crypto index provider CF Benchmarks, 60% of the recent inflows are directional holding, while the other 40% is made up of the basis trade.
Traders are optimistic that prices will surge to new record highs once the U.S. election is done and dusted.
Edited by Parikshit Mishra.
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As the senior analyst at CoinDesk, James specializes in Bitcoin and the macro environment. Previously, his role as a research analyst at Swiss hedge fund Saidler & Co. introduced him to on-chain analytics. He monitors ETFs, spot and futures volumes, and flows to understand Bitcoin.