Bitcoin might be poised for a significant rally as it appears undervalued when compared to gold and the global money supply, suggests Samson Mow, CEO of Bitcoin technology firm Jan3. He argues that Bitcoin is trading between 24% and 66% below its expected trend relative to gold's market cap, while gold itself is considered "overextended." On a recent Saturday, Mow shared these insights on X, noting that gold futures for April finished at $5,247.90, with tokenized gold PAX Gold USD trading at $5,404.14 at the time.
Mow also referenced Bitcoin’s Z-score, a statistical measure indicating how far the current price diverges from its historical average. A Z-score of 0 shows alignment with the average, while a score below 0 suggests underperformance. Historically, when the Bitcoin-to-gold ratio's Z-score drops below -2, Bitcoin has often experienced substantial price increases. Currently, this Z-score stands at approximately -1.24.
Historical data supports this pattern. For instance, in November 2022, during the collapse of the FTX crypto exchange, the Z-score dipped below -3, leading to a 150% increase in Bitcoin's price over the subsequent year. Similarly, during the COVID-19 market crash in March 2020, the metric fell below -2, and Bitcoin prices surged by over 300% within a year, peaking at roughly $69,000 in November 2021.
This perspective contrasts with the outlook of other analysts who predict further market struggles for Bitcoin due to ongoing investor uncertainty and geopolitical tensions. Some market experts foresee Bitcoin potentially dropping to $50,000, reflecting trends seen during the 2022 bear market. Bitcoin's price previously fell over 50% from a high of $60,000 before making a partial recovery to around $66,400 amidst recent Middle Eastern events.
This analysis opens a discussion on Bitcoin's future trajectory, especially as some traders anticipate significant upward movement, possibly pushing Bitcoin toward $150,000, with similar pressures building for Ethereum.