Physical Gold vs. Digital Gold: BTC Strengthens as XAUUSD Consolidates Below $3,500

Bitcoin (BTC) shows positive price action following the release of a softer-than-expected US inflation report. The chart below shows that April CPI rose by 0.2% month-over-month, below the forecast of 0.3%. Additionally, the annual figure dropped to 2.3%, the lowest since February 2021. Lower inflation reduces pressure on the Fed to maintain high interest rates, making Bitcoin more attractive.

Despite the positive price action in Bitcoin, gold (XAU) prices remain under pressure due to strong US Treasury yields. The gold-to-Bitcoin ratio indicates that Bitcoin is gaining more attention in Q2 2025, following a strong rally in gold during Q1 2025. The 10-year Treasury yield has reached 4.50% and continues to show bullish momentum. Moreover, the macro environment has shifted in favor of Bitcoin in the short term, supported by falling inflation and potential Fed easing. The market is now waiting for the upcoming PPI and retail sales data for further clues.

Bitcoin (BTC) vs Gold (XAU) – Why Bitcoin Is Outperforming Amid Inflation and Tariff Shifts

Gold to Bitcoin Ratio Signals Shift as BTC Outperforms in Q2 2025

The monthly chart for the gold-to-Bitcoin ratio indicates that the ratio hit strong resistance at the descending channel in April 2025. After reaching this resistance, the ratio has started to decline, suggesting that Bitcoin is outperforming gold in Q2 2025. The monthly candle for May 2025 points to a potential drop toward the key level of 0.026. A break below this level would signal a strong surge in Bitcoin prices.

Historically, the pivotal resistance of the ascending channel has triggered strong rallies in gold and Bitcoin. However, with gold hitting the $3,500 resistance level and entering a correction phase, concerns of overvaluation in the gold market may shift short-term investment toward Bitcoin. This rotation could drive Bitcoin prices higher in the coming weeks.

Bitcoin to Gold Ratio Breakout Hints at Further BTC Gains Over Gold

Similarly, the Bitcoin-to-gold ratio shows a strong bullish trend, indicating that Bitcoin outperforms gold during bullish phases. The ratio forms bullish consolidation patterns before each breakout. After breaking out, the ratio continues to trade higher, which pushes Bitcoin prices upward.

An important point to note from this technical chart is that when the ratio breaks above the black dotted trend line, Bitcoin typically moves sharply higher. The monthly candle for May 2025 shows that the ratio is once again approaching this pivotal black dotted trend line. A break above this level could trigger a strong surge in Bitcoin.

Bitcoin (BTC) Technical Analysis – Bullish Momentum Builds Toward $115,000

The weekly chart below confirms the above discussion by showing strong bullish price development on a broader scale. The emergence of a cup pattern followed by a descending broadening wedge indicates a long-term bullish trend. A breakout from the descending broadening wedge at $75,000 triggered a strong rally in Bitcoin.

This rally was further strengthened as the price corrected back to the breakout level of $75,000 and formed a bullish hammer. The weekly candle that followed the hammer shows strong bullish momentum and points to a potential move toward the $105,000 to $115,000 range.

The price has already reached the lower boundary of this resistance zone at $105,000. However, the current consolidation suggests that Bitcoin may soon break above this level and initiate another strong upward surge.

Gold (XAUUSD) Technical Analysis – Correction from $3,500 May Offer Buy Opportunity

The weekly gold chart shows that the market hit strong resistance around the $3,500 region and began a correction from the top of the ascending broadening wedge pattern. This pullback aligns with the decline in the gold-to-Bitcoin ratio from a key resistance area, as discussed above.

However, the price structure within the ascending broadening wedge suggests that this correction is likely to present a buying opportunity for gold traders.