According to legendary trader Peter Brandt, the ratio of Bitcoin to gold (BTC/GLD) could increase by up to 400% by 2025, representing a massive shift in Bitcoin’s performance compared to gold. Currently, the BTC/GLD ratio sits at 24:1, but Brandt suggests it could rise to 123:1 within the next few years.
A Closer Look at the Bitcoin/Gold Ratio
For the first time since Bitcoin was launched in 2009, the cryptocurrency has underperformed compared to gold, which has been hitting record highs while Bitcoin has stagnated. However, Brandt’s analysis shows that this may soon change, with Bitcoin expected to outperform gold significantly. He points to a classic "inverse head and shoulders" pattern forming on the BTC/GLD chart, which is considered a strong bullish indicator. If Bitcoin breaks through a key level, a major rally could follow.
At the current ratio of 24:1, a move to 123:1 would represent a 413% increase. If gold prices remain stable around $2,654 per ounce, such a spike would put Bitcoin’s price at over $262,000.
How Global Liquidity Impacts Bitcoin
Bitcoin has often been referred to as a "liquidity barometer," meaning its price tends to rise when global liquidity expands and fall when liquidity contracts. Analyst Lyn Alden and others note that as global money supply increases, Bitcoin’s price is likely to rise. Recently, with central banks signaling more accommodative monetary policies, including the Federal Reserve’s rate cuts and quantitative easing measures, liquidity is expected to expand further in 2024 and 2025.
The correlation between Bitcoin’s price and global liquidity suggests that as the M2 money supply increases—reflecting the total amount of money in circulation—Bitcoin could benefit. Over the past few months, M2 money supply has shown consistent growth, which has helped push up asset prices across the board, including stocks and gold. Analysts believe this trend will continue, providing more support for Bitcoin’s price growth.
What Could Propel Bitcoin to New Highs?
Several factors could push Bitcoin to new heights. First, the broader expansion of global liquidity is a critical driver. As more money circulates through the economy, investors may seek alternative assets like Bitcoin to hedge against inflation or economic uncertainty. Bitcoin’s decentralized nature and limited supply make it an attractive option for investors looking for safe-haven assets.
Additionally, many market analysts expect Bitcoin to benefit from its technical chart patterns, such as the "bullish flag" formation identified by some traders. As Bitcoin moves through key resistance levels, these patterns suggest a significant price rally may occur, potentially leading to higher returns for investors.
Profit-Taking Strategies for Traders
With the possibility of a major price rally in Bitcoin, traders are beginning to consider strategies for taking profits. Some analysts recommend using long-term trendlines to identify key levels where profit-taking may be prudent. Fibonacci extension levels, particularly 1:1, 1.382, and 1.618, are also suggested as potential targets for traders looking to capitalize on Bitcoin’s expected gains.
Analysts are optimistic that Bitcoin could see returns of 80% to 100% by the end of 2024, with even more significant gains possible by 2025 if the market continues to trend upward.
Conclusion
Bitcoin’s price may currently be lagging behind gold, but Peter Brandt and other analysts believe this trend is about to change. With a potential 400% increase in the BTC/GLD ratio, Bitcoin could significantly outperform gold in the coming years. Expanding global liquidity, coupled with bullish technical patterns, points to a strong possibility of Bitcoin hitting new all-time highs by 2025.
For forex brokers and their clients, understanding these trends is essential. Bitcoin’s potential for massive gains makes it an asset to watch closely, particularly as central banks continue to pump liquidity into the global financial system. Traders should be prepared for volatility, but the upside potential could be substantial, offering significant opportunities for those willing to take on the risks associated with cryptocurrency trading.
