This 1000x Podcast episode dives into the Bitcoin-to-Gold ratio, arguing it’s a clearer metric for BTC’s true value by filtering out the noise of dollar debasement. The analysis suggests a new paradigm for both assets that points to a significant upside for Bitcoin by year-end.
Ditching the Dollar Denominator
- “When you're long Bitcoin, you're not really 100% sure how much of your price appreciation is just dollar debasement and de-dollarization versus how much is actual crypto adoption.”
- “If you're denominating Bitcoin in gold, you get a much clearer picture of what Bitcoin's actually doing relative to its digital version of gold.”
- Pricing Bitcoin in USD is a flawed metric because it conflates genuine network adoption with the effects of monetary inflation and dollar devaluation.
- The BTC/Gold ratio acts as a powerful filter, revealing Bitcoin's performance against a more stable, non-sovereign store of value. This isolates the signal of crypto adoption from the noise of central bank policy.
A New Paradigm for Hard Assets
- “January 2023 onwards represents the paradigm that we're in now in both Bitcoin and gold... Bitcoin is in the post-FTX era... Gold is also in a new paradigm.”
- “Gold has transitioned to a new steady state where it's basically a diversification hedge, a de-dollarization hedge... Bitcoin's in its enlightenment phase.”
- Since early 2023, both assets have entered new, stable phases. Bitcoin is in a post-FTX "enlightenment" period, characterized by a steady adoption grind rather than speculative froth.
- Sparked by the US seizure of Russian reserves after the Ukraine invasion, gold has fundamentally shifted from a simple risk-off asset to a strategic de-dollarization tool for nation-states looking to reduce their reliance on the US dollar.
The Trend Channel to $150k
- “If it were to just flatline here, mean reversion alone, I think, brings Bitcoin to $150k-$160k. If gold continues rallying, we're looking at $160k-$170k plus by year end.”
- The BTC/Gold ratio is currently trading near the low end of its established trend channel (around 32) that began in January 2023.
- A simple mean reversion to the middle of this channel (a ratio of 40) by year-end implies a Bitcoin price target of $150k–$160k, even if gold's price remains flat.
- If gold continues its own rally, the tailwind could push Bitcoin’s price above $170k. This outlook is further supported by investors rebalancing profits from outperforming precious metals into Bitcoin.
Key Takeaways
- The core thesis is that by analyzing Bitcoin through the lens of gold, we can bypass macroeconomic noise and see a clear, bullish trend.
- Stop Pricing in Fiat: The BTC/Gold ratio is the clearest signal of Bitcoin’s fundamental adoption, stripping away the distortion of dollar debasement.
- Mean Reversion Points to $150k+: The established BTC/Gold trend channel since 2023 is screaming higher. A simple return to the channel’s midpoint targets a $150k–$160k Bitcoin price by year-end.
- Gold's Rally is Bitcoin's Tailwind: Gold’s new role as a de-dollarization hedge for nations and the subsequent portfolio rebalancing from gold profits into BTC create powerful dual-demand drivers for Bitcoin.
For further insights and detailed discussions, watch the full podcast: Link
This analysis reveals how the Bitcoin-to-Gold ratio cuts through dollar debasement noise, offering a clearer signal for Bitcoin's true adoption and a potential path to $156,000.
Why USD Is a Flawed Metric for Bitcoin
- The episode begins by challenging the conventional method of valuing Bitcoin in US dollars. The speaker argues that denominating Bitcoin in USD makes it difficult to distinguish between genuine crypto adoption and simple dollar debasement—the erosion of the dollar's purchasing power due to monetary inflation.
- Looking back at the 2021 bull run, much of the price appreciation was attributed not to crypto "taking over the world," but to massive government stimulus and a weakening dollar.
- By pricing Bitcoin against gold, investors can get a clearer picture of its performance as a store of value, effectively stripping out the noise of fiat currency fluctuations.
- The speaker notes that from 2020 to the post-crash period, the BTC/Gold ratio more than doubled from approximately 6 to 12, indicating that even after accounting for dollar depreciation, Bitcoin's fundamental value grew significantly.
A New Paradigm: Post-2023 Market Dynamics
- Bitcoin's Enlightenment Phase: Post-FTX and Terra/Luna collapses, Bitcoin has moved beyond the speculative froth of 2021. It is now in a "stable adoption grind higher phase," characterized by more mature and fundamentally driven growth.
- Gold's Role as a Dedollarization Hedge: Since the 2022 invasion of Ukraine, gold's function has shifted. It is no longer just a risk-off asset but a primary dedollarization hedge—an asset central banks and nations (like China) use to diversify away from US dollar-denominated securities. This shift was triggered by the US freezing Russia's dollar reserves, prompting other nations to seek safer alternatives.
Technical Analysis: The BTC/Gold Ratio Trend Channel
- The speaker presents a technical analysis of the BTC/Gold chart, identifying a clear upward-trending channel that suggests significant upside for Bitcoin.
- The current BTC/Gold ratio is trading at the low end of this established channel, around 32.
- A simple mean reversion—a theory suggesting asset prices tend to move back to their long-term average—would see the ratio climb to the middle of the channel, which sits at approximately 40.
- The speaker provides a direct calculation for this scenario: "If it were to go back to the middle of the channel by year end that kind of looks like 40 on the chart... 40 divided by 32... gets me to $156,000 a token."
Price Projections and Actionable Strategy
- Base Case: If gold's price remains flat, a mean reversion in the BTC/Gold ratio to 40 implies a Bitcoin price of $156,000.
- Bull Case: If gold continues its rally, the speaker projects a Bitcoin price of $160,000 to $170,000+ by year-end.
- Actionable Insight: A second speaker reinforces this view, suggesting a portfolio rebalancing strategy. Investors holding both assets should consider trimming profits from outperforming precious metals (like silver, which was up 40%) and reallocating that capital into Bitcoin to capture its relative upside.
Conclusion
- The BTC/Gold ratio offers a powerful framework for evaluating Bitcoin's fundamental value, independent of fiat currency fluctuations.
- Investors should monitor this ratio for mean reversion signals and consider rebalancing from assets like gold to capitalize on potential upside, targeting a mid-channel move toward a 40 ratio.
