Samson Mow: Bitcoin is undervalued compared to gold, indicating a potential for price appreciation

Bitcoin (BTC) is currently considered relatively lower compared to gold and the global money supply, which could signal a price reversal, according to Samson Mow, CEO of Bitcoin technology company Jan3.

“Currently, Bitcoin is trading about 24%-66% below its correlation trend with gold market capitalization or the global money supply. Meanwhile, gold is being valued higher than its average,” Mow shared in a post on X platform on Saturday.

Market data shows that April gold futures closed on Friday at $5,247.90. Meanwhile, PAX Gold (PAXG), a digital gold token, is trading at $5,404.14 at the time of writing.

Additionally, Mow mentioned Bitcoin’s Z-score, a metric that helps assess how close or far the BTC price is from its historical average. Specifically, a Z-score of 0 indicates the price is at the average, while a Z-score above 0 suggests the price is above average. Conversely, when the Z-score drops below 0, it indicates the price is below the average.

Bitcoin Z-score compared to gold | Source: TradingView Notably, Mow emphasized that when Bitcoin-to-gold Z-score drops below -2, Bitcoin often experiences strong rallies. Currently, the Z-score for this ratio is around -1.24.

Data from TradingView shows that this index fell below -3 in November 2022, amid the collapse of the FTX cryptocurrency exchange. Subsequently, BTC’s price increased over 150% in the following 12 months.

A similar scenario occurred in March 2020, when the COVID-19 pandemic caused the Z-score to fall below -2. At that time, Bitcoin bottomed at $3,717 but grew over 300% in the following 12 months, reaching an all-time high of around $69,000 in November 2021.

Could Bitcoin drop to $50,000?

Mow’s perspective offers a contrasting view to many analysts, who believe the cryptocurrency market may continue to face difficulties and that Bitcoin’s price could fall further due to investor uncertainty and global geopolitical tensions.

Some crypto market analysts predict that BTC could drop to $50,000, as current price action seems to reflect the bear market experienced in 2022.

In the past, Bitcoin has fallen more than 50% from its peak to trough, reaching a low of $60,000 before a slight recovery to its current level near $66,400, following recent volatility in the Middle East region.

Mr. Giao