Bitcoin May Reach a New Low Around $50,000, Expert Predicts

Bitcoin (BTC) is showing significant signs of weakness as its price continues to drift towards lower support levels, currently hovering around the crucial $82,000 mark. This price point is essential in determining the potential future direction of the world’s leading cryptocurrency. In light of this, market analyst Doctor Profit has highlighted what he believes to be a critical indicator in the current Bitcoin cycle: the Gold-to-Bitcoin (GOLD/BTC) ratio.

Key Takeaways:

Bitcoin is currently showing signs of weakness, nearing the crucial $82,000 mark.
The Gold-to-Bitcoin ratio has historically indicated market peaks and troughs, suggesting a potential bottom for Bitcoin around $50,000.
Analyst Michael van de Poppe expresses a contrarian view, indicating that Bitcoin may be undervalued.
The market is in a potential “big rotation” phase, with shifts expected between gold and Bitcoin.

Featured image from DALL-E, chart from TradingView.com.

Bitcoin

Understanding the Gold-to-Bitcoin Ratio

Doctor Profit explains that the GOLD/BTC ratio has historically provided reliable signals for identifying major market peaks and troughs. He first shared this analytical framework nearly a year ago, illustrating a historical trend where Bitcoin peaks when 0.02 BTC is equivalent to one ounce of gold and hits bottom when that ratio reaches 0.11 BTC per ounce.

He noted that this trend was evident in the previous cycle, accurately marking Bitcoin’s peak in 2021 and its bottom in 2022. Profit believes this pattern is playing out again, pointing out Bitcoin's recent peak around $125,000 when the gold-to-Bitcoin ratio hit the 0.02 mark once more.

Bitcoin

Source: Doctor Profit on X - GOLD/BTC chart and historical price patterns.

Currently, the pressing question is whether the market will revisit the historical 0.11 BTC-per-ounce level, which has traditionally indicated a market bottom. Using current gold prices, Profit calculated that if gold is valued at approximately $5,500 per ounce, dividing this by 0.11 implies a Bitcoin price near $50,000. He believes this projection aligns with his broader estimate that Bitcoin’s cycle low could be between $50,000 and $60,000.

He also mentioned that a more optimistic scenario for gold, with a price increase to $7,000 per ounce, would suggest a Bitcoin bottom near $63,000. Profit asserts that both of these scenarios indicate that gold is likely to outperform Bitcoin in the near future.

Is Bitcoin Entering a Late-Cycle Bear Phase?

Not all analysts share a negative outlook for Bitcoin. Technical analyst Michael van de Poppe presents a different viewpoint, suggesting that gold's recent strength may be reaching its peak, potentially leading to a capital shift back to Bitcoin.

Van de Poppe pointed out that the relative strength index (RSI) of Bitcoin measured against gold on a weekly basis has reached an all-time low. He interprets this as a significant valuation imbalance, indicating that one asset is overextended while the other is undervalued. This situation is part of what he calls the “big rotation” phase in the market cycle.

Additionally, he referenced Bitcoin’s Z-Score indicator, which compares its market capitalization to its realized capitalization, adjusted for volatility to evaluate whether it is overvalued or undervalued. Van de Poppe noted that Bitcoin’s current Z-Score is lower than at several key historical bottoms, including those in 2015, 2018, during the 2020 COVID-19 crash, and the lows of 2022's bear market. He suggests that these indicators point to BTC being deep in a bear market phase and potentially approaching its final stages.

Bitcoin

Source: BTCUSDT on TradingView.com - Daily chart indicating a downward trend for BTC.

As of now, Bitcoin is trading at $83,435, down 2.2% within the last 24 hours and 7% over the past week.