Bitcoin is undervalued by approximately 66% relative to gold, and the Z-score signal indicates a potential major surge.

On January 3rd, CEO and Bitcoin advocate Samson Mow posted on X stating that compared to the market capitalization of gold or the global money supply, Bitcoin is currently undervalued by approximately 24% to 66%, while gold shows signs of “over-expansion.” Mow’s analysis centers on the Z-score indicator of the Bitcoin-to-Gold ratio, which is currently about -1.24. Historical data indicates that when this indicator drops below -2, it often signals a significant upward trend afterward.

Z-Score Analysis: Historical Trigger Patterns of the Bitcoin-to-Gold Ratio

(Source: Trading View)

The Z-score of the Bitcoin-to-Gold ratio (BTC/Gold ratio Z-score) measures how much the current ratio deviates from its historical average. A Z-score of 0 indicates the ratio aligns with the historical mean; above 0 suggests Bitcoin is overvalued relative to gold; below 0 indicates undervaluation.

Mow points out that when this indicator falls below -2, Bitcoin tends to experience a “substantial” rise. Two typical historical cases confirm this pattern:

Two Key Cases Triggering Major Historical Rises in Z-Score

November 2022 (FTX collapse): The Z-score fell below -3, and Bitcoin increased over 150% within the following 12 months.

March 2020 (COVID-19 pandemic crash): The Z-score dropped below -2, Bitcoin fell to about $3,717, then rebounded, surging over 300% in the next 12 months, reaching a historical high of about $69,000 in November 2021.

As of the time of writing, the Bitcoin-to-Gold Z-score is about -1.24, not yet below the -2 threshold that historically triggers large rallies, but Mow believes that the relative undervaluation itself is an important bullish signal.

Bull-Bear Battle: Bullish Z-Score Signal vs. $50,000 Downside Risk

Mow’s optimistic outlook contrasts with some market voices. Over the weekend, geopolitical tensions from the US and Israel’s airstrikes on Iran caused investor uncertainty, leading Bitcoin to drop over 50% from its peak to a low around $60,000, with limited recovery, currently trading near $66,400. Some crypto analysts believe the current trend resembles the 2022 bear market structure, with potential further decline to $50,000.

Gold surpassing $5,247 highlights Bitcoin’s relative undervaluation even more. However, Mow sees this as a buying opportunity rather than panic: the “over-expansion” of gold suggests capital may eventually rotate back into Bitcoin, helping to correct the currently severe divergence in Bitcoin and gold valuation ratios.

Frequently Asked Questions

What does the current Z-score of the Bitcoin-to-Gold ratio indicate?

The current Z-score is about -1.24, indicating Bitcoin is undervalued relative to gold. Samson Mow points out that historically, when this indicator drops below -2, it often precedes a significant rally within the next 12 months, as confirmed by the 2022 FTX collapse and the 2020 COVID-19 crash.

How does gold surpassing $5,247 affect Bitcoin?

The sharp rise in gold widens the valuation gap of Bitcoin relative to gold market cap. Mow estimates Bitcoin is undervalued by about 24% to 66% compared to its trend. He believes gold’s “over-expansion” creates an imbalance that could eventually drive capital from gold back into Bitcoin.

Will Bitcoin fall to $50,000?

Some analysts think the current pattern resembles the 2022 bear market, with geopolitical uncertainties risking a dip to $50,000. However, bullish voices like Samson Mow argue that the current undervaluation is typical of a market cycle reversal, and both perspectives are circulating in the market.