Rotation from gold to Bitcoin? Data tells a different story

The thesis that capital flows from gold to Bitcoin is popular, but the underlying data paints a more nuanced picture. Analyst Darkfost states, based on a CryptoQuant chart, that the rotation signal is currently negative: both Bitcoin and gold are trading below their 180-day moving average. At the time of writing, Bitcoin is at $77.500, down 2.4% over the past 24 hours.

In brief:

• The rotation signal between gold and Bitcoin is currently negative, as both assets trade below their 180-day average.
• Analyst Darkfost sees no consistent pattern in the historical relationship between the two assets.
• This casts doubt on the popular assumption that capital automatically flows from gold to Bitcoin.

Negative signal for both assets

The chart Darkfost shares compares the price trends of gold and Bitcoin over several years. The model measures the relationship between the two trends based on their 180-day moving average. When gold trades below that average and Bitcoin does as well, the model issues a negative signal.

That is exactly the current situation. According to the analyst, this does not mean that gold is flowing into Bitcoin, but that both assets are losing ground at the same time. Capital leaving gold does not appear to automatically find its way to Bitcoin.

Rotation thesis under pressure

The assumption that investors swap gold for Bitcoin as an alternative store of value has been circulating in the crypto community for some time. We previously wrote about how Bitcoin increasingly displays characteristics of gold as an investment category. The rotation idea builds on that: if gold falls, that capital would be released and flow into Bitcoin.

Darkfost points out that the historical data shows no consistent relationship. Green periods in the chart, when the signal was positive, alternate irregularly with red periods. A clear pattern is lacking, which makes the thesis less strong than it appears at first glance.

When does the signal turn positive?

According to the model, the signal only turns positive when Bitcoin manages to break above its 180-day average while gold remains below it. That would point to a relative outperformance of Bitcoin versus gold, making the idea of capital rotation more plausible.

That point has not been reached yet. Bitcoin is currently at $77.500 and is showing a decline. Analysts previously examined a potential bottom on the weekly chart around $79.000, although the price now remains below that level. Whether and when the rotation signal flips depends on how both assets develop in the coming weeks.