Gold Rises as Bitcoin and U.S. Market Reach Record Highs
- Bitcoin and U.S. stocks have reached extreme valuation levels unseen in nearly a century.
- Gold gains renewed momentum against Bitcoin as traders look for defensive stability.
- Market history shows assets often reverse when risk exposure becomes excessive.
Bitcoin and U.S. stocks have reached historically high valuations compared to global markets and economic output. According to Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, both assets are showing signs of extreme market positioning. His analysis, titled “Gold Support: Bitcoin $100,000, Stocks 2x GDP,” compares three major ratios: the S&P 500 to MSCI World Ex-US Index, Bitcoin prices, and the S&P 500 to GDP ratio, using data spanning from the 1970s to 2025.
The findings reveal that since Bitcoin’s creation in 2009, its sharp price surge has coincided with an unprecedented expansion in U.S. equity valuations. The S&P 500 has climbed to almost twice the U.S. GDP, a level not seen in nearly a century. Meanwhile, the S&P 500’s ratio to global peers stands at 2.34, underscoring how overvalued U.S. equities are relative to the rest of the world.
Market Extremes and Reversion Risks
McGlone warned that such “stretched” levels often signal potential turning points. He cited historical parallels where similar excesses led to sharp reversals. During the 1930s in the U.S., the 1990s in Japan, and China’s recent cycle, risk assets that had soared to extreme valuations later faced major deflationary corrections.
In his statement on X, McGlone said, “Bitcoin’s rise has coincided with the U.S. stock market’s surge to its highest versus GDP and the rest of the world in about a century, with reversion implications favoring gold.”
His analysis suggests that gold could regain appeal as a defensive asset if market corrections occur. Historically, such overextensions in equity markets have often been followed by a shift toward safe-haven assets. The present correlation between Bitcoin’s exponential rise and inflated stock-to-GDP ratios signals potential instability.
McGlone, in his report, has posed a question: “Is it different this time?” This question reflects the market’s skepticism about the extent to which the existing situation could become a new normal without reversal. With Bitcoin trading above $100,000 and stock prices far above their sustainable levels, a pullback might benefit gold, the asset that is most commonly used in times of deflation.
Related: The SafeHaven Shift: Gold Eyes New Record Above $4,050 as BTC Rebounds
Strengthening of Gold’s Position against Bitcoin
The latest information from Investing.com confirms that gold is gaining strength in its market position compared to Bitcoin. The XAU/BTC ratio, which shows the price of gold in relation to Bitcoin, increased by 1.14% and closed at 0.0374. This rise indicates that gold’s recovery in the short term has been substantial, as more investors seek safe havens amid market turmoil.
In the last week, gold has appreciated 15.19% over Bitcoin, while the increase for the previous month stands at 17.47%. The ratio has increased by 32.34% in the last three months, indicating the growing strength of gold as risk assets exhibit wider swings.
Although gold’s comparative value has declined by 77.43% over the past five years, its recent rebound signals a shift in investor sentiment. Over the past six months, gold prices have decreased by 3.72%, and over the past year, they have declined by 5.65%; however, the trend is now pointing upward.
This movement indicates renewed support for gold amid tightening global liquidity and investor caution. As the S&P 500’s valuation remains at twice the size of the economy and Bitcoin trades at near-record levels, traders appear to be diversifying toward gold once again.
