Bitcoin is in a deep struggle against gold as the performance gap widens

Bitcoin does not meet the expectations of many investors as a reliable hedge against various market scenarios. Specifically, its competitive positioning against gold continues to become more challenging, showing a significant shift in how the market perceives this digital asset.

The BTC-to-gold ratio is now at 18.46, reflecting a 17% decrease from its 200-week moving average (200WMA) of 21.90. This level is significant because it indicates the ongoing weakening of Bitcoin in its struggle against traditional stores of value like gold.

The BTC-to-gold ratio reaches a critical level after a major decline

From its peak of 40.9 in late 2024, Bitcoin has fallen approximately 55% against gold. This alarming trend demonstrates how alternative digital currencies are gambling amid rising demand for traditional precious metals.

While gold has reached new record highs surpassing $4,900 per ounce and increased by about 12% year-over-year, Bitcoin remains below $89,000 and has shown only minimal positive momentum this year. This imbalance speaks volumes about changing risk appetite and portfolio diversification strategies among institutional investors.

History shows deeper declines in past bear market cycles

The current decline is not unique, but historical precedents provide a clear message. During the previous bear market in 2022, the BTC-to-gold ratio fell more than 30% from its 200WMA and remained below this level for over a year. Even worse, during the 2017-2018 cycle, the decline reached 84%.

The ongoing downturn, which began in November, follows the same pattern. Based on history, if this trend continues at the same pace, the ratio could stay below the 200WMA until late 2026. For investors trusting mean reversion, this is a long wait with uncertainty.

Bitcoin is gambling as a risk asset, not as a USD hedge, amid dollar decline

One of the surprising observations is that Bitcoin does not act as a traditional USD hedge even as the American currency weakens. JPMorgan strategists say that dollar weakness is merely a temporary market flow and sentiment adjustment, not a structural economic change. Therefore, they expect the USD to recover as the US economy grows.

As a result, the market increasingly prices Bitcoin as a liquidity-sensitive risk asset—the type of asset that investors first consider when market stress rises. In this environment, gold and emerging market currencies are more attractive as diversification tools than crypto assets.

Pudgy Penguins demonstrate a Web3 success formula amid market headwinds

Although the macro environment is challenging for Bitcoin, positive stories are emerging in the NFT and decentralized application space. Pudgy Penguins is growing as one of the strongest NFT-native brands of this cycle, moving beyond simple speculative “digital luxury goods” to become a multi-vertical consumer IP platform.

Its strategy involves acquiring users through mainstream channels—toys, retail partnerships, and viral media—before onboarding them into Web3 through games, NFTs, and the PENGU token. The ecosystem has already reached retail sales exceeding $13 million and over one million units sold, with gaming experiences surpassing 500,000 downloads in just two weeks.

While the market assigns a premium valuation to Pudgy relative to traditional IP peers, sustained growth depends on successful execution in retail expansion, gaming adoption, and deeper token utility development.

Overall, Bitcoin’s struggle against gold will continue to be a central theme into 2026, and investors should prepare for a longer period of underperformance.