Gold's advance towards $5,000 an ounce has become a major topic among hard asset speculators, including Yardeni's research director, Ed Yardeni, and billionaire investor John Paulson.
But what could happen to Bitcoin (BTC), which many consider to be 'digital gold', if this precious metal rises further?
BTC records growth six times that of gold
Historically, Bitcoin has recorded much stronger growth compared to gold when their markets rise simultaneously.
From March 2020 to March 2022, during the time the U.S. Federal Reserve (Fed) implemented loose monetary policy, the price of BTC increased by about 1,110%, while gold only rose by 35.5%.
Weekly chart of global money supply (M2) compared to XAU/USD and BTC/USD | Source: TradingView
In the price surge from November 2022 to November 2023, coinciding with the increase in global money supply (M2), gold climbed about 25%, while Bitcoin skyrocketed 150%, nearly six times that of the precious metal.
Currently, many analysts predict that the price of gold could rise from around $3,265 to $5,000, equivalent to a 50% increase. Therefore, if history repeats itself, Bitcoin could rise 300% or reach a price of $285,000 per BTC.
This aligns with the expected Bitcoin price target of analyst apsk32, based on a power law model normalized by gold's market capitalization.
Source: X
The gold boom will push Bitcoin to $250,000
Frank Holmes, CEO of US Global Investors, predicts that the price of gold will reach $6,000 during Trump's presidency, arguing that gold bullion has lagged behind the increase in global money supply (M2).
He links this bold target to Trump's tariff policies, which he believes could weaken the USD by about 25%, boosting gold's appeal along with strong central bank demand.
Holmes predicts that Bitcoin could surpass the supply of $97,000 and rise to $120,000 – $150,000 in the near future, with long-term potential reaching $250,000 as adoption accelerates.
BTC could reach $155,000 if the delayed correlation with gold remains intact
By the end of April, gold had risen to an ATH of $3,500, up 33.35% year-to-date (YTD). The price has slightly adjusted to around $3,237 as of May 5. Meanwhile, Bitcoin has only increased by 0.82% since the beginning of the year.
Comparing the daily chart of BTC/USD and XAU/USD | Source: TradingView
Some market observers, including Cryptollica analysts, point out that Bitcoin's past behavior often follows gold after a delay, suggesting the potential for Bitcoin to reach $155,000 if it breaks out of the current consolidation range.
Comparing the BTC/USD trend with XAU/USD | Source: Cryptollica
Bitcoin's 30% drop from the ATH of $110,000 seems quite mild compared to the previous sell-off of over 50%. The current recovery increases the likelihood that Bitcoin could follow gold's upward trend if market conditions improve.
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