Gold closes in on ATH as Bitcoin falls again – Time to rotate again?

Gold and Bitcoin are once again locked in a high-stakes competition.

On the 16th of December, gold rose to $4,305 per ounce, just below its $4,381 record from two months earlier. However, at press time, it traded at $4,282.16.

Data showed that gold climbed 62% this year, marking its strongest performance since 1979. Expectations of Federal Reserve rate cuts, central bank buying, and ETF inflows supported the rally.

That strength stood in contrast with Bitcoin’s recent performance.

Gold’s current market dynamics

The leading cryptocurrency traded around $86,000 at press time after a sharp 15th of December selloff triggered an hour-long, $200 million wave of long liquidations.

This has raised a lot of questions among analysts, as noted by Ray Youssef, CEO of NoOnes, in an e-mail sent to AMBCrypto, wherein he said,

” Its [gold] rise to new highs and growing interest in safe-haven assets appear to be bearish headwinds for BTC, especially if the market begins to perceive inflation risks as more sustainable.”

Youssef further added,

“After a difficult November, optimism for the Christmas rally has noticeably dimmed, and many market participants expect a resolution as early as January.”

He believes that Bitcoin needs a breakout above $94,000 to regain confidence. A drop below $80,000 could trigger forced liquidations and risk another crypto winter.

At the time of writing, Bitcoin traded nearly 30% below its October peak of $126,210. That divergence raised a broader question for markets.

Does gold’s momentum weaken Bitcoin’s “digital gold” narrative, or does it reflect demand for scarce assets across the board?

Michaël van de Poppe weighs in

Needless to say, this widening performance gap has analysts concerned, with crypto trader Michaël van de Poppe noting,

“For the fourth time in the history of #Bitcoin, the RSI against Gold is hitting <30.”

Source: Michaël van de Poppe/X

But Poppe views this historical divergence not as a sign of Bitcoin’s permanent weakness, but as a strong indicator that a market rotation is approaching.

In his post, he highlights three previous bottoms: the 2015 bear market, the 2018 bear market, and the 2022 bear market.

Those periods marked relative bottoms in Bitcoin’s performance against gold.

Van de Poppe argued that such divergences often precede capital rotation rather than prolonged weakness.

In this case, analysts suggested gold appeared overextended relative to Bitcoin [BTC]. That imbalance increased the probability of capital rotating back into BTC.

Van de Poppe also highlighted the widening gap between Bitcoin’s price and its 20-week Moving Average. He described the deviation as “massive,” a condition that historically preceded trend reversals.

Of course, historical patterns do not guarantee outcomes. Even so, the setup pointed toward a potential upside correction in Bitcoin relative to gold.

Analysts eye a rotation trade

Echoing a similar sentiment, another X user, Martin Pelletier, added, 

“Gold $GLD is now playing catch up to #BTC. One hell of a pair trade.”

Adding weight to the technical argument for a swift reversal, many analysts are anticipating a significant Bitcoin bounce, believing the BTC/GOLD ratio looked fundamentally oversold here.

This bullish expectation was further supported by on-chain analysis from Chain Mind, which points to key metrics suggesting Bitcoin is ripe for a strong upward move against its analog rival.

Source: Chain Mind/X

What about silver?

Bitcoin recently pushed close to the $90,000 mark after reclaiming its previous all-time high earlier this year. The rally lifted its market capitalization to roughly $1.75 trillion.

That move allowed Bitcoin to briefly overtake silver, becoming the eighth-largest asset globally for the second time in 2025.

However, Infinite Market Cap data from the 16th of December showed silver holding the fifth position. Bitcoin ranked 8th at the time.

Now, with 2026 approaching, the market’s next major moves will depend on the balance between the Fed’s ongoing “quasi-QE” liquidity and potential tightening by the Bank of Japan, as highlighted by VALR CEO Farzam Ehsani in an email to AMBCrypto.

Ehsani put it best when he said,

“The Bank of Japan meeting on December 19 could become a pivotal turning point for markets for the rest of the year.”

Even so, Bitcoin’s long-term outlook remains cautiously positive, supported by expanding liquidity, fading long-term holder selling, and steady institutional ETF positions.

These factors create a foundation for renewed demand and a potential breakout from its current sideways trend, provided macro policy stabilizes, and liquidity continues to build into early 2026.

Final Thoughts

• Gold’s explosive 64% YTD rally confirms its status as the dominant safe-haven asset during periods of heightened macroeconomic uncertainty.
• The widening gap between Bitcoin and its 20-Week MA indicates extreme oversold conditions often followed by aggressive reversals.