The Peak of Gold Records in Q1 Indicates Dominant Risk Sentiment
BTC has shown resilience, consolidating near highs, while gold has surged.
Analysts speculate that gold may have leaked into new highs in Q1, surpassing Bitcoin (BTC) during trade tensions, and a potential top could shift capital into risk assets.
If such a rotation occurs, could BTC gain momentum to reach $100K in Q2?
Potential Rotation from Gold to BTC
Gold’s 70% surge over 16 months has propelled its market capitalization to $20.75 trillion, now surpassing the total of the top ten assets, which stands at $12.5 trillion. Therefore, analysts anticipate a capital shift if local highs are reached.
A Bank of America survey reinforces this notion—58% of fund managers are overweight in gold, while only 3% are bullish on BTC. The appeal of Bitcoin as a hedge is limited, but a shift in positioning could provide upward momentum.
However, macro-driven volatility remains a key variable. BTC is trading 10% below its New Year rally, while gold has increased by 17%.
Notably, the vertical expansion of XAU aligns with the corrective phase of BTC, indicating a liquidity shift.
In short, amidst the market corrections, gold has printed new historical highs, while BTC has lost critical structural support, signaling a shift towards liquidity rotation.
Bitcoin’s True Test Lies Ahead
The gold rally from $1,820 in October 2023 to $3,100 this week is historic. Despite rising interest rates, it has risen +16% YTD, outperforming stocks, currencies, and even the dollar.
Traditionally, a stronger dollar should dampen gold prices. The simple reason? A robust dollar makes Treasuries more attractive. However, the opposite has occurred, with demand for gold surging, breaking market norms.
Simultaneously, inflation is heating up. The annual PCE inflation rate for one month is slightly above 4.0%, while the six-month figure is now at 3.1%. As inflation erodes purchasing power, gold’s allure as a safe haven will only increase.
With the rebound in inflation, XAU has hit 50 historical peaks over the past 12 months. In fact, Zero Hedge reports that demand for physical gold has surged amid escalating trade tensions, enhancing its role as a macro hedge.
In January, U.S. gold imports reached a record $300.4 billion, doubling the levels seen during the pandemic in 2020.
For BTC to challenge XAU’s dominance, a strategic reserve for Bitcoin needs to be established.
Without such a mechanism, expectations for BTC to reclaim $100K remain speculative, and risk assets still face liquidity constraints.
Despite the RSI being overextended, XAU price action continues to exhibit strong demand absorption. This makes a pullback less likely—especially with the forthcoming “reciprocal” tariff announcements, a key macro risk event.
In such a climate, Bitcoin’s structural testing lies ahead as gold remains positioned to extend price discovery to new historical highs.
