Bitcoin remains under pressure after a sharp correction, as risk aversion drives investors to safe havens.
On the other hand, gold is thriving on a favorable macro environment, while bitcoin is trading as a high-beta asset, underscoring our neutral short-term stance.
Bitcoin has recently stabilized after a sharp correction from the October highs. Trading at around $90,000, the cryptocurrency remains well below its peak of $126,000, reflecting a shift in market sentiment towards caution.
Bitcoin: A Few Key Factors
While volatility has eased somewhat, price action suggests bitcoin is struggling to regain momentum in a generally risk-averse market environment. Several bitcoin-specific factors have also influenced recent developments.
Corporate players who had previously embraced bitcoin as part of their balance sheet strategy have become more cautious, reducing new allocations and, in some cases, reducing existing positions. At the same time, the economics of bitcoin mining have deteriorated as the increasing complexity of mining to maintain block production and higher operating costs have reduced miners’ margins. These events forced some miners to liquidate stakes to cover costs. Such structural pressure further weighs on bitcoin in the near term.
The bitcoin-to-gold ratio has fallen significantly in recent weeks, falling below the 25x multiple touched in April, signaling that gold has outperformed bitcoin as investors seek safety. This trend closely matches our risk gauge of choice: the ratio of the VIX’s 90-day moving average to its 200-day moving average. The rising ratio signals increased near-term volatility relative to longer-term risk, an optimistic backdrop against which bitcoin typically outperforms gold, as markets view the spike as temporary rather than a threat to the larger story. When the ratio declines, long-term stress takes center stage, driving investors toward defensive assets. In that environment, gold usually benefits from its safe-haven status, while bitcoin tends to come under selling pressure, SEEbiz reports. The recent decline in the VIX ratio quite impressively mirrors the fall in bitcoin and its rotation into gold.
Liquidity sensitivity and risk appetite
In addition, data on the stock chain supports this change: realized profits have softened, spending by long-term holders has increased slightly, and foreign exchange inflows have seen a slight increase. These are all signs of declining confidence among marginal customers. At the same time, the positioning of futures contracts normalized from previously elevated levels, which indicates a cooling of the speculative surplus. Together, these indicators suggest that bitcoin’s recent weakness is not only macroeconomic, but also synchronized with weakened internal momentum.
Bitcoin remains a high-beta asset (with a beta range of 1.20-1.60) that is highly sensitive to liquidity conditions and overall market risk appetite, rather than functioning as a hedge. While it typically benefits from periods of abundant liquidity and strong risk sentiment, it underperforms amid increased volatility and risk aversion. Despite ongoing structural adoption trends, near-term performance will continue to be primarily driven by macro factors such as liquidity and volatility metrics.
We note that the correlation structure of bitcoin has not changed significantly: it is still traded more as a long-term technology asset than as a store of value. Assets’ reaction to recent spikes in volatility, which has underperformed despite limited declines in stocks, shows it has not yet decoupled from broader risk-on sentiment. Moreover, the deterioration of the miners’ economy and the cautious attitude of institutional allocators emphasize that endogenous “incentives” are currently limited.
With long-term risk aversion remaining elevated, gold retains a tactical advantage over bitcoin in the current environment. Bitcoin could retake the lead once liquidity conditions improve or risk appetite re-emerges more broadly, but such a shift is not yet evident in the data.
Additionally, oversold conditions and a modest recovery point to the potential for a tactical recovery if macro stimulus (eg interest rate cuts, liquidity injections) were to materialize. Therefore, we maintain a neutral attitude towards crypto assets.
