Bitcoin’s volatility compared to gold has dropped to historically low levels, creating concerns about the cryptocurrency’s future performance against the precious metal. Bloomberg Intelligence senior strategist Mike McGlone revealed that Bitcoin’s 260-day annualized volatility now sits at just 2.2 times that of gold as of August 1, marking the lowest ratio ever recorded.
This represents a significant shift from Bitcoin’s typical pattern since 2021, when the digital asset averaged more than three times gold’s volatility while producing comparable returns. McGlone views this dynamic as fundamentally unsustainable and highlights the shrinking risk premium as a worrying indicator for Bitcoin’s capacity to deliver superior performance moving forward.
Bitcoin Struggles Against Traditional Safe Haven
The volatility compression occurs during a period when Bitcoin has failed to consistently outpace gold, despite carrying substantially higher risk over the past four years. The Bitcoin-to-gold price ratio continues trading within established ranges, unable to breach critical resistance around the 9.0 level that was last challenged in late 2021 and tested again in early 2025.
BREAKING: Cathie Wood (CEO of Ark Invest) says #Bitcoin "is becoming even more scarce than gold. The difference is, when the gold price goes up, as it has, production goes up, the rate of increase in the supply goes up — that can not happen with Bitcoin.” pic.twitter.com/lE4VzI4xfi
— Swan (@Swan) December 20, 2024
McGlone warned that Bitcoin’s risk-on characteristics could become a disadvantage during the second half of the year if broader market appetite for risk diminishes. The strategist also pointed to compressed S&P 500 volatility and cautioned about possible mean reversion across risk assets.
Gold Positioned for Potential Breakout
In a risk-off environment, gold stands to benefit significantly and could potentially surge beyond the $3,500 price target, according to McGlone’s analysis. The strategist suggested that if markets remain sideways through year-end, 2025 might be considered successful under a second Donald Trump presidency, with the notable exception of record-breaking gold prices.
Meanwhile, Bitcoin could underperform as decreasing volatility and diminishing speculative interest create headwinds for the cryptocurrency. This projection comes even though both assets have posted impressive gains in 2025, with Bitcoin recently reaching a new all-time high above $123,000 while gold faces fresh resistance near the $4,000 level.
Implications for Crypto Markets
The narrowing volatility gap between Bitcoin and gold could signal reduced institutional interest in the cryptocurrency as a high-risk, high-reward asset. This development may prompt investors to reassess Bitcoin’s role in portfolios, particularly if the traditional risk premium continues to erode.
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