Bitcoin's Break to New Heights Nudges Its Ratio Against Gold to Record Levels

As institutions continue to pile into the digital asset toward the end of the year, Bitcoin's code limits its maximum supply to 21 million tokens.

Bitcoin’s record-breaking rally this week has seen its ratio against gold hit new highs as institutions continue to pile into the digital asset ahead of the year-end.

The ratio, which measures how many ounces of gold one Bitcoin can buy, hit an unprecedented 37.3 on Monday, indicating that one Bitcoin can now buy around 37 ounces of gold—a new historic high.

The reading is now around half a point higher than the peak seen during the height of crypto’s last bull run in November 2021 at 36.7.

“Hitting a new high signals the continued adoption and maturation of Bitcoin as an asset class,” Sidney Powell, CEO and co-founder of institutional capital marketplace Maple Finance, told Decrypt. “We expect to see the ratio catch up based on the tailwinds of ETF inflows, which history shows increase over time, and bitcoin increasingly being viewed as a staple part of balanced portfolios.”

The ratio is calculated by dividing Bitcoin’s price by the spot price of gold per ounce, and it usually serves as an indicator for comparing the relative strength and investor preference between the two assets.

The ratio highlights Bitcoin’s status as digital gold, positioning it as an “increasingly favored store of value over traditional gold,” Singapore-based digital asset trading firm QCP Capital wrote in a note on Monday.

However, traders still tend to opt for gold during times of uncertainty over Bitcoin, which has become more correlated to traditional markets, partly due to the approval of U.S. Bitcoin exchange-traded funds in January.

Global Bitcoin ETF assets under management have reached $119 billion, according to data from Coinglass. This is less than half of gold-backed ETFs’ $290 billion as of November 2024, according to data from the World Gold Council.

Bitcoin’s code caps its maximum supply at 21 million tokens and includes halving events that reduce the new supply by 50% periodically, ensuring the final Bitcoin won’t be minted until approximately 2140.

This programmed scarcity contrasts with gold’s continuous mining production, although both assets are often compared as stores of value due to their limited supply characteristics.

Moreover, while gold maintains lower volatility—around 20% annually—and benefits from its 3,500-year history as a traded asset, Bitcoin offers higher return potential despite more significant price swings, with volatility near 50%.

Edited by Sebastian Sinclair