Analyst Predicts Major Bitcoin Rally Based on Gold Undervaluation Metrics
Analysis of Bitcoin's Z score in relation to gold reveals significant undervaluation, with Samson Mow suggesting this technical indicator points toward an upcoming substantial BTC price surge.
According to Samson Mow, CEO of Bitcoin technology firm Jan3, Bitcoin (BTC) is trading at a significant undervaluation when measured against both gold and the worldwide money supply, suggesting a potential price reversal may be on the horizon.
In a Saturday post shared on X, Mow stated that "Bitcoin is about 24%-66% below its trend relative to gold's market cap or global money supply, while gold is overextended."
At Friday's close, gold futures set for April delivery were trading at $5,247.90; meanwhile, PAX Gold USD, which represents tokenized gold, was valued at $5,404.14 at the time of publication.
The Bitcoin executive also referenced the Z-score for Bitcoin, a statistical measure that evaluates how far the current BTC price deviates from its historical average. When the Z-score reads 0, it suggests the price aligns with the historic mean, whereas a reading above 0 shows the price is climbing beyond average benchmarks.
Conversely, a reading below 0 indicates the price is trading beneath the historical average. According to Mow, when the Bitcoin-to-gold ratio's Z score falls beneath -2, Bitcoin has historically experienced "major" upward price movements. Currently, the BTC-to-gold ratio sits at approximately -1.24 on the Z score scale.
Information from TradingView indicates that this particular metric plunged below -3 during November 2022, coinciding with the FTX crypto exchange collapse, after which BTC's price soared more than 150% throughout the subsequent 12-month period.
Previously, an identical pattern emerged during the March 2020 Covid market crash, when the indicator descended below -2 and Bitcoin bottomed out at approximately $3,717. In the 12 months that followed, Bitcoin skyrocketed by more than 300%, ultimately hitting what was at that time an all-time peak of roughly $69,000 by November 2021.
Bitcoin to crash to $50,000?
Mow's analysis stands in opposition to perspectives from other market analysts, who are projecting additional downside pressure for the cryptocurrency market and anticipate further Bitcoin price declines driven by investor uncertainty and ongoing geopolitical tensions.
Several crypto market analysts suggest that BTC's price trajectory could be heading toward $50,000, drawing parallels between current price behavior and the patterns observed during the 2022 bear market cycle.
From its peak, Bitcoin experienced a decline exceeding 50% to reach a trough of $60,000, followed by a modest recovery that brought prices to their current range near $66,400, a rebound that occurred following recent developments in the Middle East over the weekend.