For years, Bitcoin (BTC) traders have watched its price relative to gold (XAU) for clues on when BTC bottoms in US dollar terms. But in 2026, that BTC-to-gold signal is starting to look less dependable.
Key takeaways:
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Bitcoin hits undervaluation versus gold and has slipped below its Power Law trend.
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BTC/XAU is already under the 200-2W EMA that historically lined up with bottoms.
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Gold’s next move likely dictates whether BTC gets a relief rally.
Bitcoin keeps declining in gold terms
This week, the BTC/XAU ratio, or the value of Bitcoin versus gold, drifted away from its long-term “Power Law” trend for the first time in history, as highlighted by analyst Julius.
A Power Law is a long-term trend curve that some analysts use to model Bitcoin’s growth path over time. In trading terms, it can flag potential overvaluation when the price stretches above the curve, and possible undervaluation when it slips below.
BTC/XAU weekly chart ft. power law bands. Source: TradingView/JuliusAs of January, BTC/XAU was at its most undervalued stage. It reached those levels as gold surged past the record $5,000 mark and markets turned risk-off due to yen intervention and US government shutdown fears.
That also occurred when most Wall Street firms predicted gold to rally further in 2026, including Bank of America, which said last week that the precious metal would cross above $6,000 by the year’s end.
In contrast, Bitcoin markets showed concerns over the four-year-cycle theory. As it notes, BTC price topped out at around $126,200 in October 2025, and could decline below $50,000 in the coming months.
This further hinted at a sustained BTC/XAU downtrend in the coming weeks, rather than a cyclical bottoming setup.
Do technicals suggest a BTC price bottom?
A continued decline in the BTC/XAU ratio would also threaten a decisive breakdown below the 200-2W EMA (200-2W EMA; the blue wave), a level that historically aligned with true BTC/USD cycle bottoms.
BTC/XAU vs. BTC/USD two-week chart comparison. Source: TradingViewThat includes a fake breakdown signal in 2022, wherein BTC/XAU broke below its 200-2W EMA only to reclaim it as support after two months.
In 2026, the ratio has already plunged below that same EMA, with macro catalysts raising odds that it could decline further, thus breaking the BTC/XAU bottom fractal.
Conversely, Citi warned gold’s rally could stall or reverse later in 2026 if real US yields rise, the dollar stabilizes and risk appetite returns. In that scenario, the demand for defensive, risk-off hedges may decline.
Related: Bitcoin trend line cross mimics 2022 amid ‘insane’ BTC vs. silver breakdown
A gold pullback could relieve some pressure on BTC/XAU, potentially restoring Bitcoin’s odds of hitting $140,000 or higher price targets, as predicted by Standard Chartered and other companies.
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