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Bitcoin-to-Gold Ratio Hits Historic Peak as Year-End Rally Soars

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From decrypt by Vince Dioquino

Bitcoin and gold are both stores of value. Image: Shutterstock

Bitcoin’s break to new heights this week has nudged its ratio against gold to record levels as institutions continue to pile into the digital asset toward the end of the year.

The ratio, which measures how many ounces of gold one Bitcoin can buy, reached unprecedented levels Monday, rising to 37.3, which means one Bitcoin can now buy roughly 37 ounces of gold—a new historic high.

The reading is now roughly half a point higher compared to that witnessed during the height of crypto’s previous bull run in November 2021 at 36.7.

"Hitting a new high signals the continued adoption and maturation of Bitcoin as an asset class," Sidney Powell, CEO and co-founder of institutional capital marketplace Maple Finance, told Decrypt. "We expect to see the ratio catch up based on the tailwinds of ETF inflows, which history shows increase over time, and bitcoin increasingly being viewed as a staple part of balanced portfolios."

Calculated by dividing Bitcoin's price by the spot price of gold per ounce, it typically serves as an indicator for comparing the relative strength and investor preference between the two assets.

The ratio reinforces Bitcoin's status as digital gold, positioning it as an "increasingly favored store of value over traditional gold," Singapore-based digital asset trading firm QCP Capital wrote in a note on Monday.

Still, traders continue to opt for gold during times of uncertainty over Bitcoin, which has become more correlated to traditional markets, thanks partly to the approval of U.S. Bitcoin exchange-traded funds in January.

  Global Bitcoin ETF assets under management have reached $119 billion, data from Coinglass shows. This is less than half of gold-backed ETFs' $290 billion as of November 2024, according to data from the World Gold Council.

Bitcoin's code limits its maximum supply to 21 million tokens and includes halving events that periodically reduce new supply by 50%, ensuring the final Bitcoin won't be minted until approximately 2140.

Its programmed scarcity contrasts with gold's continuous mining production, though both assets are frequently compared as stores of value due to their limited supply characteristics.

In any case, while gold maintains lower volatility—around 20% annually—and benefits from its 3,500-year history as a traded asset, Bitcoin offers higher return potential despite more significant price swings, with volatility near 50%.

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