Gold vs. Bitcoin: BTC Rebounds as XAUUSD Faces Sharp Correction

Gold (XAUUSD) has entered a sharp correction phase after reaching record highs. The metal recorded its steepest one-day drop in over 12 years. This decline was driven primarily by profit-taking after several weeks of strong gains. The earlier rally had been fuelled by safe-haven demand, expectations of rate cuts, and heightened geopolitical uncertainty.

The drop in gold prices was driven by short-term overheated market conditions that pushed the price above the long-term resistance of $4,000. Despite this strong surge in gold, Bitcoin (BTC) has remained within a volatile trading range since July 2025.

However, the recent decline in gold has sparked short-term buying pressure in Bitcoin. This suggests a temporary capital rotation from gold to Bitcoin as investors seek opportunities in higher-risk assets.

Bitcoin Strengthens as Gold Pulls Back

The chart below shows that gold and Bitcoin have exhibited an inverse correlation in the short term. Gold formed a double top near the resistance level of $4,380. This pattern signaled exhaustion after a strong rally driven by safe-haven demand and expectations of rate cuts.

As gold prices declined following the formation of the double top, Bitcoin reversed higher after forming a double bottom pattern. This rebound in Bitcoin following gold’s correction indicates a rotation of capital from safe-haven assets into risk assets. It reflects improving investor sentiment in the broader market. However, this reflects only a short-term divergence, as the overall long-term trend for both assets remains strongly bullish.

Bitcoin-to-Gold Ratio Signals a Long-Term Shift

The Bitcoin-to-gold ratio shows a strong bullish trend that has persisted since 2014. The formation of ascending channels indicates that the overall direction remains upward.

However, the ratio has been consolidating below the 40 level since peaking in April 2021. This prolonged consolidation appears to be forming a solid bullish base. A breakout above the 40 level could trigger a sharp rally in Bitcoin, potentially allowing it to outperform gold.

However, the recent rally in gold prices during the second and last quarters of 2025 caused a notable correction in the ratio. It brought the ratio down toward the red trend line of the ascending channel, a key support zone for Bitcoin. If the ratio holds above this area and rebounds above the 40 level, it would likely signal renewed strength in Bitcoin. This move could open the door to new all-time highs.

BTC Technical Analysis: Symmetrical Broadening Wedge

The daily chart for Bitcoin shows that the price has been consolidating within a symmetrical broadening wedge pattern, indicating strong volatility. The price failed to break above the $125,000 level, triggering a sharp correction toward the lower boundary of the symmetrical broadening wedge.

The rounded $100,000 region remains a key support area for Bitcoin, as buyers have consistently stepped in around that level. However, a decisive breakout above $125,000 would likely confirm renewed bullish momentum and open the way for a rally toward the $140,000 target zone.

XAUUSD Technical Analysis: Ascending Channel Pattern

The weekly chart below shows that the gold market has reached long-term resistance near $4,400. The upper extension of the ascending channel pattern defines this resistance. The key support zone remains between the $3,800 and $3,900 region. The price will likely stabilize within this range before turning higher.

What’s Next for Gold and Bitcoin?

Gold’s correction is a natural and healthy sign within a broader bull market. However, the decline in gold prices and the simultaneous rebound in Bitcoin indicate a shifting market dynamic. If Bitcoin holds support near $100,000, it could continue trending higher.

On the other hand, if gold maintains its support between $3,800 and $3,900, the next leg of the rally could target the $5,000 mark. Both assets remain within a long-term bullish trend, and the current correction can be seen as a buying opportunity for long-term investors.