By Chris Hollingworth 
Bitcoin faced a significant milestone on March 14 as it broke a rising support trendline against gold that had been in place for over 12 years. This development has raised concerns among analysts, with NorthStar highlighting that if Bitcoin remains below the gold trendline for an extended period, it could mark the end of its 12-year bull run.
The breakdown in the BTC/XAU ratio coincided with a surge in spot gold prices, reaching a new record high above $3,000 per ounce on the same day. In contrast, Bitcoin, often referred to as “digital gold,” has experienced a decline of 11% year-to-date.
One key factor driving this disparity is the diverging net flows into US-based spot exchange-traded funds (ETFs) tracking Bitcoin and gold. While gold ETFs have seen substantial inflows, Bitcoin ETFs have faced outflows, reflecting a preference for traditional safe-haven assets amid growing macroeconomic uncertainties.
The current macroeconomic landscape, marked by escalating trade tensions and fears of a global economic slowdown, has propelled investors towards assets like gold. Central banks, including those in the US, China, and the UK, have ramped up their gold purchases, further bolstering gold prices.
In contrast, Bitcoin has been moving in tandem with the broader risk-on market, as indicated by its correlation with the Nasdaq Composite index. The recent breakdown in the BTC/XAU ratio aligns with historical patterns, particularly a fractal from March 2021 to March 2022, which preceded the last bear market.
Technical analysis of the BTC/XAU ratio suggests a potential downside, with the ratio showing signs of fading momentum and a bearish divergence in the relative strength index (RSI). A decisive drop below key support levels could signal increased vulnerability for Bitcoin in terms of price declines against the dollar.
Despite the potential for a correction in Bitcoin’s price, analysts view this as a possible opportunity within a broader bull market cycle. The focus now turns to whether key support levels will hold and pave the way for a bullish revival in the future.
