Bitcoin at Record Undervaluation vs Gold — What It Means for BTC Price in 2026
Bitcoin (BTC) has entered its deepest undervaluation versus gold (XAU) on record, according to the BTC/XAU Z‑score developed with Power‑Law bands. The Z‑score measures deviations from the long‑term BTC–gold ratio; a reading below −2 indicates the ratio is more than two standard deviations under its historical mean. Historically, past dips toward the −2 band preceded major Bitcoin bottoms followed by prolonged rallies — for example, an undervaluation signal in November 2022 preceded ~150% BTC gains over the next year, and a March 2020 signal was followed by a 1,170% rise one year later. Analysts behind the model say gold’s rally and Bitcoin’s current discount suggest BTC could “massively outperform” gold in the coming months, supporting bullish price projections for 2026, with some analysts forecasting targets between $200,000 and $300,000 by year‑end. The pattern observed historically also notes that Bitcoin’s largest parabolic phases tended to begin after gold had already moved decisively above its long‑term trend. This analysis is not investment advice; trading carries risk.
Bullish
The BTC/XAU Z‑score at below −2 historically coincides with major BTC lows followed by multi‑month to multi‑year rallies, which implies a bullish bias. Past examples (March 2020 and November 2022) show large price expansions after similar undervaluation signals — one-year gains of ~1,170% and ~150% respectively. The report also highlights a recurring sequence where gold rallies first, then BTC enters a parabolic phase; gold’s recent strength combined with BTC’s discount increases the probability of capital rotation into crypto. For traders this suggests higher upside potential over medium to long horizons, supporting bullish positions or allocation increases, particularly if corroborating indicators (on‑chain flows, spot ETF demand, macro liquidity) confirm rotation. Short term, volatility may persist: bargains versus gold can coincide with continued market weakness before a sustained reversal, so risk management is necessary. Overall, the indicator’s historical reliability favors a bullish classification but not a guaranteed outcome — macro shocks, regulatory changes, or liquidity shifts could negate the pattern.