Bitcoin Trails Gold as Debasement Trade Shifts Towards Bullion in Early 2026

Bitcoin is currently trading at a near two-year low compared to gold, as evident from Bitwise's liquidity Z-score, which has reached -2. This trend mirrors previous market conditions that typically precede Bitcoin price recoveries.

Key Takeaways

Bitcoin's trade relative to gold is at a two-year low, with significant liquidity adjustments suggesting a unique investment opportunity.
Analysts identify that gold is currently favored over Bitcoin amid rising prices for the former and a fall in Bitcoin's value.
Historical patterns indicate that low Z-scores may signal impending recoveries in Bitcoin prices.
Major shifts from gold into Bitcoin may require specific macroeconomic conditions to align.

Bitcoin trades at rare discount to gold on debasement trade

Bitcoin at a Two-Year Low Against Gold

In January 2026, Bitcoin traded at a notable discount when compared to gold. This scenario, adjusted for global money supply, represented what analysts termed a rare asymmetric opportunity, particularly within the context of the debasement trade, which seeks to leverage hard assets like gold and Bitcoin as safeguards against currency devaluation driven by expansive monetary policy.

Over the years, central banks have resorted to quantitative easing, prompting investors to seek assets that have a fixed or limited supply. Gold has been the traditional safe haven for centuries, while Bitcoin has emerged as a digital counterpart with a capped supply.

In early 2026, this theory was put to the test; gold reached unprecedented all-time highs while Bitcoin lagged. Bitcoin's value dropped to its lowest point relative to gold in two years, leading some analysts to assert that the debasement trade currently favors gold and silver over Bitcoin.

However, proponents of Bitcoin argue that it is significantly undervalued when compared to gold, particularly when deviation metrics suggest that extreme ratios often occur at Bitcoin’s historical price bottoms.

According to Bitwise analysis, Bitcoin’s price in relation to gold on a liquidity-adjusted basis indicates that the cryptocurrency is trading well beneath its fair value considering the overall global money supply. The Bitcoin-gold ratio has plunged below what Bitwise has designated as the liquidity fair value line, revealing a substantial gap noted in their research.

The liquidity Z-score reached a troubling -2 in January 2026, indicating that Bitcoin was trading more than two standard deviations below its expected value. Historically, scores at or below -1.5 have coincided with significant Bitcoin price lows, including notable bottoms in 2015, the accumulation zone from 2018 to 2019, and the crash of March 2020. These moments were followed by sharp recoveries in Bitcoin’s price, as established by analysis.

The transition from gold to Bitcoin predominantly includes financial gold held in ETFs, funds, and futures, as opposed to central bank reserves. By the end of 2025, globally backed gold ETFs reported record levels of assets under management following substantial yearly inflows.

Analysts note that only a small portion of this asset base may represent the capital available for reallocation. For larger shifts to occur, there would need to be a decisive transition to a risk-on macroeconomic environment while retaining the impetus for debasement.

Research examining crypto multipliers suggests that changes in Bitcoin's market cap per unit of inflow could be significantly elevated due to its considerable market capitalization. If a small fraction of the coins were accessible for transactions, the potential effects of reallocating funds from gold ETFs could lead to significant changes in Bitcoin’s overall market value and price.

The recent surge in gold prices has been propelled by demand for safe-haven investments, concerns regarding central bank autonomy, geopolitical uncertainties, and expectations of interest rate cuts from major central banks.

For Bitcoin to experience a rotation in favor, analysts indicate that three key conditions must be met simultaneously. First, the motivation for debasement must continue to drive investors towards hard assets as a hedge against currency weaknesses. Second, there must be an increase in market risk tolerance where investors would be inclined to choose a higher volatility asset over one with lower volatility. Lastly, the influence of regulatory headlines and policy risks surrounding cryptocurrencies must subside from dominating daily price movements.

Recent market analyses indicate that mere inflows may not suffice if the macroeconomic or policy landscape becomes unfavorable, as strong inflows into crypto-related products continue to be overshadowed by broader macroeconomic and policy challenges.

Bitcoin ETFs represent a significant slice of the circulating supply, implying that a considerable shift from gold ETFs could have a substantial impact on the current Bitcoin ETF framework, according to industry data.