Bitcoin (BTC-USD) has reached its most significant point of undervaluation relative to gold (CM:XAUUSD) on record, sparking a debate among analysts about a massive price rebound in 2026. This signal, based on the BTC–XAU ratio’s Z-score, suggests that Bitcoin is currently trading more than two standard deviations below its historical average compared to the precious metal. Historically, such extreme discounts have been the starting point for some of Bitcoin’s most aggressive rallies.
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The BTC–XAU Z-Score Hits a Historical Low
To determine if Bitcoin is cheap or expensive compared to gold, traders look at the Z-score of the BTC–XAU ratio. This metric measures how far the current price deviates from the long-term trend. On Friday, the score dropped below −2, entering the lowest band for the first time in the history of the model. Julius, the analyst who conceptualized the Power-Law bands for this ratio, stated that “everything points to Bitcoin massively outperforming gold over the coming months.”
Historical Patterns Point Toward a Triple-Digit Surge
This isn’t the first time Bitcoin has looked cheap compared to gold, and the previous outcomes were explosive.
- November 2022: A similar undervaluation signal was followed by a 150% rally over the next year.
- March 2020: After hitting this zone during the global liquidity crisis, Bitcoin surged by over 1,170% within 12 months.
- 2017 Top: Conversely, the Z-score correctly predicted the market peak when Bitcoin became extremely overbought, while Gold was oversold.
Why Gold’s Rally Might Be Good for Bitcoin
Interestingly, the biggest jumps in Bitcoin’s price often happen right after gold has finished a major bull run. Historical data indicates that Bitcoin’s parabolic growth phases usually lag behind gold’s movements by two months to a year. Because gold has spent much of early 2026 at record highs, many investors believe we are entering the window where capital begins to rotate back into digital gold to chase higher returns.
While the current market sentiment remains cautious, several technical models suggest that a return to the fair value mean would be a massive move. If Bitcoin follows the historical pattern of previous gold-led cycles, many analysts project the asset could reach between $200,000 and $300,000 by the end of 2026. However, this depends on whether the historical correlation between these two scarce assets holds firm under current economic conditions.
At the time of writing, Bitcoin is sitting at $94,864.62.
