Bitcoin’s volatility compared to gold has dropped to historic lows, creating what one prominent analyst calls a concerning signal for the cryptocurrency’s future prospects. The ratio of Bitcoin’s volatility to gold’s volatility has fallen to just 2.2 times as of August 1, marking the lowest level ever recorded according to Bloomberg Intelligence senior strategist Mike McGlone.
This dramatic shift represents a significant departure from Bitcoin’s typical behavior since 2021, when the digital asset generally maintained volatility levels more than three times higher than gold while producing comparable returns. McGlone argues this dynamic cannot be sustained long-term and views the shrinking risk premium as a warning sign for Bitcoin’s ability to deliver superior performance moving forward.
Bitcoin Struggles Against Traditional Safe Haven
The compression in volatility coincides with Bitcoin’s ongoing challenge to meaningfully outpace gold, despite carrying substantially more risk over the past four years. The price ratio between Bitcoin and gold remains stuck in a trading range, failing to break through crucial resistance around the 9.0 level that was last reached in late 2021 and tested again in early 2025.
JUST IN: CNBC says #Bitcoin is the first asset in history "that is more scarce than gold." pic.twitter.com/NILjoeYzzQ
— Watcher.Guru (@WatcherGuru) December 5, 2023
McGlone expressed concern that Bitcoin’s risk-on characteristics could become a liability during the second half of the year if investors’ appetite for risk decreases. The strategist highlighted the currently suppressed volatility in the S&P 500 and warned that risk assets might experience a reversion to their historical mean.
Gold Positioned for Potential Surge
Should market conditions remain subdued, gold stands to benefit as a risk-off asset, with McGlone suggesting the precious metal could potentially climb beyond the $3,500 threshold. The analyst indicated that if markets stay relatively flat through year-end, 2025 might be considered successful under a second Trump administration, with gold prices setting new records as the notable exception.
Meanwhile, Bitcoin may underperform as reduced volatility and diminishing speculative interest put pressure on its price action. This forecast comes even as both assets have posted strong gains in 2025, with Bitcoin recently reaching a new all-time high above $123,000 while gold faces fresh resistance approaching the $4,000 level.
Implications for Crypto Markets
This analysis suggests potential headwinds for Bitcoin as its risk-reward profile becomes less attractive relative to traditional safe-haven assets. The convergence in volatility patterns could signal a shift in institutional and retail investor preferences toward more stable store-of-value alternatives.
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