According to her analysis, the divergence in market sentiment between the two assets could create conditions where Bitcoin eventually outperforms gold.

A Shifting Dynamic Between Bitcoin and Gold

Alden points out that market behavior between Bitcoin and gold often follows a cyclical pattern. Periods of strong performance in one asset can eventually be followed by renewed momentum in the other. From her perspective, the current environment suggests that Bitcoin may be positioned to regain strength after gold’s recent surge.

Looking at the next two to three years, Alden believes the probability of Bitcoin outperforming gold in terms of price appreciation is relatively high. If she were forced to choose between the two assets under current conditions, she says she would lean toward Bitcoin.

Strong Optimism Surrounding Gold

Gold prices have recently reached new highs, climbing to approximately $5,608 in January. This sharp increase has significantly boosted investor interest in the precious metal.

However, Alden does not characterize the current situation as a speculative bubble. Instead, she describes it as a period of strong optimism among market participants. Several sentiment indicators support this view. One index measuring investor mood in the gold market recently reached 72 out of 100, placing it firmly within the “greed” territory.

Such readings suggest that investors are currently very bullish on gold.

Cautious Sentiment in the Bitcoin Market

In contrast, sentiment toward Bitcoin appears considerably more conservative. Indicators tracking market psychology in the cryptocurrency sector recently signaled “extreme fear,” reflecting a more defensive attitude among investors.

Bitcoin is currently trading around $71,000, which is roughly 44% below its all-time high of $126,000 recorded in October. Alden suggests that this gap between price levels and investor sentiment could indicate that the market is overly pessimistic about Bitcoin’s prospects.

Bitcoin and Gold Do Not Always Move Together

Bitcoin is frequently compared with gold as a hedge against inflation and economic uncertainty. Because of this narrative, many investors refer to Bitcoin as “digital gold.”

However, Alden stresses that the relationship between the two assets is not always consistent. There are periods when Bitcoin and gold rise together, but there are also times when their price movements diverge significantly.

For this reason, she cautions against relying too heavily on a fixed narrative when evaluating the interaction between the two markets.

Diverging Views on Bitcoin’s Long-Term Role

Not all investors agree on Bitcoin’s role as a safe-haven asset. Some critics argue that gold maintains a stronger position because it is widely held by central banks as part of their reserve portfolios, giving it a long-established status in the global financial system.

At the same time, many analysts within the cryptocurrency industry believe the connection between Bitcoin and gold is gradually strengthening. In periods of macroeconomic uncertainty, both assets are increasingly viewed as alternative stores of value, reinforcing their roles in diversified portfolios.

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Alden argues that when a particular sector becomes excessively priced relative to realistic growth expectations, investors begin searching for asymmetric opportunities elsewhere. If leading AI names reach levels where further upside becomes difficult to justify fundamentally, capital rotation could follow. In that environment, Bitcoin may stand out as a beneficiary.

Are AI Valuations Reaching a Saturation Point?

Companies at the center of the AI buildout — most notably Nvidia — have delivered strong market performance. Nvidia shares have climbed 35.48% over the past 12 months, reflecting intense investor enthusiasm around AI infrastructure and GPU demand.

However, some analysts question whether this pace of appreciation can continue indefinitely. While expectations remain high for continued solid earnings performance, the key issue is whether growth can persist at a rate sufficient to support elevated valuations. Albion Financial Group CIO Jason Ware has described Nvidia as perhaps the most important company and stock in the U.S. market today, yet he also raised the question of whether ongoing results will be “good enough” to justify further price expansion.

At the same time, heightened investor focus on AI means Bitcoin is now competing for capital in ways it previously did not. Institutional and retail funds alike are allocating heavily toward AI-driven equities, potentially limiting crypto inflows — at least for now.

Why Bitcoin May Not Need Massive Inflows

Bitcoin currently trades at $67,849, approximately 46% below its October all-time high of $126,100. Over the past 30 days, the asset has declined 24.49%. Despite this drawdown, Alden suggests that a large-scale capital wave may not be necessary for the next advance.

She emphasizes that Bitcoin often moves on marginal demand shifts. With long-term holders maintaining positions and effectively creating a supply floor, even a modest increase in new buying pressure could push prices higher.

However, Alden does not anticipate a sharp V-shaped recovery. Historically, Bitcoin rarely forms rapid bottoms outside extraordinary macro stimulus events. Instead, it typically enters a prolonged consolidation phase after reaching lows. She characterizes the current environment as more of a gradual grinding period, noting that additional downside of $10,000 to $20,000 remains possible within a broader stabilization process.

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“If it weren’t for the tariff situation, my price target would have been much higher,” Alden said. Still, she believes Bitcoin will close the year at a higher level than today.

Liquidity Could Be the Key Catalyst for Bitcoin

According to Alden, a strong liquidity boost in financial markets is essential for Bitcoin to reach more optimistic price targets. This scenario might be triggered by a major disruption in the U.S. bond market, prompting the Federal Reserve to implement yield curve control or initiate another round of quantitative easing (QE).

She also noted that crypto markets are more prone to volatility due to their 24/7 trading structure, unlike traditional financial markets with limited hours. “If uncertainty builds over the weekend, some investors choose to sell their Bitcoin on Sunday to prepare for Monday,” Alden explained.

Bitcoin May Decouple from Nasdaq

Alden emphasized that Bitcoin doesn’t necessarily have to move in sync with the tech-heavy Nasdaq 100 index. In her view, events that damage Nasdaq’s profit margins but do not impact global liquidity could allow Bitcoin to chart its own course.

To illustrate, she pointed to the global market environment between 2003 and 2007, when the U.S. dollar remained weak and capital flowed into emerging markets, commodities, and gold. Alden believes a similar market cycle could once again favor Bitcoin even if U.S. equities underperform.

Strong Correlation Between Bitcoin and Global Liquidity

In a previous research report, Alden noted that Bitcoin moved in the same direction as global M2 money supply 83% of the time over any given 12-month period. The study labeled Bitcoin as the “strongest barometer of global liquidity”, outperforming assets like the S&P 500 (SPX), gold, and global equity indices (VT) in terms of correlation with liquidity.

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In a November 17th post on X, Alden wrote:

“I’ve been kind of a polite long-term Ethereum bear, but the post-election new low in ETH/BTC is even more brutal than I expected.”

Alden noted that while Trump’s administration is expected to be “open to crypto securities,” she was still taken aback by Ether’s underperformance. On November 15, the ETH/BTC ratio hit a multi-year low of 0.033, its lowest level since March 2021, despite the positive outlook following Trump’s win.

After Trump’s victory, U.S. spot Ethereum ETFs saw an influx of $751.8 million. However, some analysts are concerned that Ethereum might be “dying a slow death” against Bitcoin. On the other hand, Consensys CEO Joe Lubin remains optimistic, stating that Ethereum is poised for long-term gains post-election.

Lubin emphasized that Ethereum is finally shaking off the regulatory pressures that have been placed on it for years. He added:

“Ethereum is much bigger and more mature than all other ecosystems, except Bitcoin.”

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Lubin also speculated that Trump’s policies could help push DeFi (Decentralized Finance) into the mainstream, moving it from a niche market to a much broader audience.

Trump Administration’s Crypto Policy Potential

Experts believe that Trump’s administration could bring policies that favor DeFi, giving Ethereum an opportunity to regain strength. Marcin Kaźmierczak suggested that Trump’s policies might help transition DeFi from a niche sector into the mainstream.

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