Bitcoin (BTC) price has gained by 23% in five trading days since August 17. During the same period, the price of gold has moved from $4,300 to $4,600. BTC’s massive gains compared to gold have seen the XAU/BTC ratio drop to its lowest price since May.
Billionaire Ray Dalio is now urging investors to buy some Bitcoin alongside gold, saying that it could be the best way to hedge against the rising US debt.
Ray Dalio Surges Investors to Buy Some BTC
Ray Dalio noted that national debts are soaring, and this is creating the need for investors to diversify their portfolios with assets like Bitcoin and gold. He noted that BTC and gold have the potential to perform well because they are not produced by the government.
Dalio’s remarks come days after the US debt reached $40 trillion for the first time in history. US Treasury Secretary Scott Bessent has tried to tame this rising debt through Treasury buybacks as recently reported by CoinGape.
The billionaire had also recently urged investors to abandon Bitcoin for gold, saying that it has the potential to perform better considering the current risks around a potential drop in AI stocks.
XAU/BTC Ratio Drops to Lowest Level Since May
The XAU/BTC reading has dropped from 0.070 on August 17 to 0.057 at the time of writing. This drop represents a 23% drawdown in just five days, suggesting that Bitcoin is performing better than gold.
This reading has also dropped to test support at the 200-day EMA of 0.059. Closing below this EMA will suggest that Bitcoin’s long-term trend is more bullish than that of gold.
Bitcoin’s gains against gold come as the king coin registers a 23% gain after moving from $62,000 on August 17 to trade at $77,200 at the time of writing. These gains come on the back of optimism that the move by the US Treasury to buy back government bonds will improve liquidity.
Still, both gold and Bitcoin face fresh headwinds caused by the escalating tensions between the US and Iran after the former said it will impose economic pressure against Iran.
Bitcoin Price Forecast as Bull Flag Emerges
The price of Bitcoin is creating a bull flag on the two-hour chart that usually suggests that the future BTC outlook is bullish as the recent rally cools off before another upward move begins.
If Bitcoin price closes above the resistance at $78,800, the bullish outlook portrayed by this bull flag will play out and cause a move above the psychological resistance of $80,000.
The RSI at 63 also suggests that the momentum is still favoring bulls despite the drop in price from $78,800 to $77,200 at the time of writing. The drop in this RSI reading from 88 to 63 also suggests that the buying pressure is cooling off before the next uptrend commences.
This bullish thesis could fail if the price of Bitcoin drops below the psychological support of $75,000 and the RSI line prints a lower low below 50. That move could suggest that there is a lot of profit-taking after the recent gains and buyers are becoming hesitant.