Bitcoin vs. Gold – Inflation Hedge, Liquidity Surge, and Market Volatility

Bitcoin (BTC) rebounded to around $86,000 after President Trump signalled a pause on auto tariffs. This possible relief boosted risk appetite and supported Bitcoin’s price increase. Trump also excluded tariffs on electronics, which eased market fears. However, tensions with China remain. The US still imposes up to 145% tariffs on Chinese goods, while China has retaliated with a 125% levy. These high tariffs keep uncertainty elevated. Despite short-term optimism, markets remain cautious due to potential new tariffs on semiconductors and pharmaceuticals.

On the other hand, gold (XAU) also gained support from rising uncertainty. Investors continue to see gold as a safe-haven asset as trade tensions persist. Both assets remain strong as fears of a global trade war intensify. This article explores how rising global liquidity, shifting trade policies, and evolving market sentiment drive the bullish trajectories of Bitcoin and gold.

Bitcoin Holds Gains Amid Rising Global Liquidity

The recovery in Bitcoin from the strong support of $75,000 aligns with a broader increase in the global M2 money supply, which has reached $90.21 trillion as of February. Historically, Bitcoin and gold have strongly correlated with the rising money supply. For example, in the first half of 2020, Bitcoin surged from $10,000 to $60,000 as global stimulus pushed liquidity higher. Similarly, when M2 hit around $89 trillion in October 2024, Bitcoin rallied again. The M2 money supply indicates strong liquidity in the market. It signals a potential surge in asset prices. This highlights the significance of gold and Bitcoin’s positive momentum.

Gold has responded to the liquidity wave by hitting a new record high of $3,350. As liquidity continues to expand, Bitcoin may also follow. The chart below shows Bitcoin’s exchange inflow data, which supports short-term caution. BTC recorded a net inflow of $76.40 million, while total net assets were $74.88 billion, as per the data of 15 April 2025.

Historically, strong inflows signal possible selling pressure as traders move coins to exchanges. The recent rise in inflows suggests potential profit-taking or fear-driven selling. However, the liquidity and economic uncertainty indicate a potential bullish trend. If prices fall, it could present a buying opportunity ahead of the next surge in Bitcoin.

Bitcoin (BTC) vs Gold (XAU) – Correlation Shifts and Market Sentiment

Shifting Correlation Between Bitcoin and Gold Prices

The chart below shows the correlation between Bitcoin and gold prices and the correlation coefficient. Gold maintains a steady upward trend, while Bitcoin remains highly volatile. The correlation coefficient fluctuates between positive and negative values, indicating an unstable relationship. In late 2024, both assets moved in the same direction, reflecting a positive correlation. However, in early 2025, gold continued to rise while Bitcoin declined, showing a negative correlation. This mixed behaviour suggests that Bitcoin is a safe-haven asset, but its correlation with gold remains inconsistent and driven by broader market sentiment.

Bitcoin-to-Gold Ratio Signals Long-Term Bullish Momentum

To further support the discussion above, the chart below shows the BTC-to-Gold ratio, which has declined after hitting a strong pivot. However, the long-term trend remains bullish. The ratio has formed an inverted head and shoulders pattern since 2016, with key lows in 2020 and 2023. This bullish formation often leads to a sharp rise in the ratio, typically driven by strong Bitcoin rallies, such as in 2016 and 2020. A breakout above the 40 level would signal another potential surge in Bitcoin prices.

On the other hand, the weekly chart of this ratio also supports strong bullish momentum. Since 2022, the ratio has formed a cup and handle pattern within the triangle. A break above 40 would be a bullish signal for Bitcoin. Once the current correction ends, Bitcoin will likely generate a strong buy signal. The key support for this ratio is around the 20 level. When the ratio touches this area, gold may mark a peak, and Bitcoin could begin a strong upward surge.

Bitcoin (BTC) Technical Analysis – Preparing for Next Surge

The weekly chart for Bitcoin shows a reversal from the long-term support zone between $65,000 and $75,000, a strong base for the next upward rally. Last week’s reversal from the $75,000 area increased the price to $85,000. A bullish hammer candle has formed on the weekly chart, signalling strong buying interest. This pattern suggests that Bitcoin may rally toward the pivotal $105,000 level. The trend remains bullish, as the price has broken a cup pattern.

Gold (XAU) Technical Analysis – Parabolic Surge

The weekly chart for gold shows a strong hammer candle forming in the overbought region. This indicates that gold remains within a parabolic move. Volatility stays high as prices continue to rise. Strong liquidity and economic uncertainty driven by tariff concerns support this upward momentum.