Why Analysts Now Favor BTC

Macroeconomist Lyn Alden believes Bitcoin may outperform gold over the next two to three years as market sentiment becomes increasingly optimistic toward the precious metal.

Speaking on the New Era Finance podcast, Alden said that while gold has recently benefited from strong investor demand, sentiment toward Bitcoin may now be overly pessimistic.

She noted that if she had to choose between the two assets for the next few years, she would favor Bitcoin.

According to Alden, Bitcoin and gold have historically taken turns leading market performance. During certain periods, gold outperforms while Bitcoin lags, and in other phases the relationship reverses.

She believes the current cycle could eventually shift back in Bitcoin’s favor.

Gold Sentiment Turns Euphoric While Bitcoin Faces Fear

Gold recently reached a new all-time high near $5,608 per ounce. Alden does not view the rally as a speculative bubble, but she acknowledges that investor sentiment toward the metal has become increasingly optimistic.

The JM Bullion Fear and Greed Index for gold showed a “Greed” reading of 72 out of 100 on January 27, indicating strong bullish sentiment among investors.

Crypto Market Sentiment Tells a Different Story

In contrast, sentiment in the cryptocurrency market appears far more cautious.

The Crypto Fear and Greed Index recorded an “Extreme Fear” reading of 18 out of 100 on the same day. Bitcoin has also been trading about 44% below its October all-time high of $126,000.

Alden believes the market may currently be undervaluing Bitcoin due to overly negative sentiment.

Debate Continues Over Bitcoin and Gold Narrative

Bitcoin and gold are often viewed as alternatives to fiat currencies, but their price movements are not always closely correlated. At times they rise together, while in other periods they diverge significantly.

Alden cautions against assuming a fixed relationship between the two assets, noting that both markets are influenced by different macroeconomic forces.

Her perspective differs from that of billionaire investor Ray Dalio, who has expressed skepticism about Bitcoin as a long-term store of value. Dalio has pointed to concerns including the lack of central bank backing and questions around privacy and technological risks.

Dalio continues to view gold as one of the most established forms of money and one of the largest reserve assets held by central banks worldwide.

However, Alden’s outlook reflects a broader view of market cycles. After gold’s strong performance this year and the extremely pessimistic sentiment surrounding Bitcoin, she believes the balance between the two assets could shift again in the coming years.

Whether that shift occurs will depend on how both markets perform in the next phase of the global financial cycle.