Gold vs. Bitcoin: XAUUSD and BTC Correct Lower to Build Momentum for Next Breakout

Bitcoin (BTC) remains under pressure as risk-off sentiment weighs on the cryptocurrency market. Prices have dropped after the sharp increase in the US Producer Price Index to 0.9% in July. The hotter inflation data reduced hopes for a larger Federal Reserve rate cut, curbing investor demand for risk assets like Bitcoin.

On the other hand, gold (XAUUSD) is consolidating below the $3,500 level, stabilising after a strong rally. This pause positions the metal for the next potential leg higher. This article highlights how Bitcoin and gold remain in focus, with bullish structures forming in both assets. The Bitcoin-to-Gold ratio emerges as a pivotal guide for the next significant move.

Bitcoin-to-Gold Ratio Signals Bullish Breakout Potential

The weekly chart for the Bitcoin-to-Gold ratio shows that the ratio is trading at the edge of a cup-and-handle pattern. A break above the 40 level would be a bullish signal, potentially driving the ratio toward the 48 region. Such a breakout would also support a surge in Bitcoin prices.

Until the ratio clears the 40 level, Bitcoin is likely to consolidate within a wide range. The broader outlook remains strongly bullish, with the ratio ultimately targeting the 110 area. This region could be where Bitcoin begins to form a topping pattern.

The Bitcoin-to-Gold ratio can also be analysed through the formation of multiple inverted head-and-shoulders patterns, each preceding a significant surge in Bitcoin prices. The first breakout occurred in May 2016, triggering a strong rally in Bitcoin. The second breakout above the neckline came in October 2020, which again led to a sharp surge.

Currently, a similar pattern has formed with the neckline around the 40 level. A break above this pivotal region would likely initiate another significant surge in Bitcoin prices. Therefore, the 40 level has become a critical zone that could mark the beginning of the next strong rally in Bitcoin.

Bitcoin Forms Bullish Base Above Key Support Despite Correction

Bearish Hammer Signals Short-Term Weakness in Bitcoin

Bitcoin has shown a strong bullish trend over the past few years. However, this move followed a period of sharp volatility, with prices trading inside broadening patterns. In 2021, Bitcoin formed a double top that eventually led to a steep decline, producing a key low in 2022 at $15,460. This level became a long-term buying opportunity and set the stage for the development of a symmetrical broadening wedge pattern.

The symmetrical wedge broke to the upside in 2023, triggering a powerful surge in prices. Following that breakout, a descending broadening wedge also formed and was later broken to the upside. By 2025, Bitcoin had established an inverted head-and-shoulders pattern with an upward-sloping neckline. The breakout above the $110,000 region confirmed this structure and initiated another strong rally.

However, after reaching a record high of $124,533, Bitcoin printed a bearish hammer candlestick. Prices are now correcting lower toward the $110,000 zone. The bearish hammer at the highs signals increased uncertainty and suggests Bitcoin may undergo a deeper correction before attempting the next major leg higher.

Bitcoin Correction Sets Stage for Next Bullish Move

The daily chart for Bitcoin shows that prices have formed a topping pattern around the $124,000 region, initiating a correction back toward support. The immediate support lies at $110,000, and a break below this level could push Bitcoin toward the $105,000 region. A decisive move below $105,000 would increase uncertainty and trigger further volatility.

Despite the current correction, the broader trend for Bitcoin remains bullish. This pullback is likely to present a buying opportunity for the next move higher, with potential targets near the $140,000 level. The $70,000–$75,000 zone remains a key long-term support for Bitcoin.

Gold Price Consolidates Below $3,500, Builds Base for Next Rally

The weekly chart for spot gold shows consolidation below the $3,500 region over the past four months. The trading range remains between $3,500 and $3,250. A break below $3,250 could drive prices toward the strong support at $3,000.

A correction to the $3,000 region would likely present a strong buying opportunity, with potential for spot gold to rally toward the $4,000 level. The pattern of sustained bullish action in recent years, followed by consolidation phases before each surge, suggests a similar outcome this time.

Therefore, any correction should be viewed as an opportunity for traders to position for the next upward move.

Ascending Channel Structure Supports Gold’s Path Toward $4,000

The chart below shows that prices have been trading within an ascending channel since 2023. The recent correction in spot gold has found strong support in the $3,200–$3,100 region, which remains a long-term buying opportunity within the broader bullish structure.

This support extends toward the $3,000 level, where any deeper correction would also be considered a buying opportunity. From this region, gold could resume its upward trajectory, targeting the upper end of the ascending channel in the $3,800–$4,000 range by year-end.