When gold surged past $5,400 amid heightened geopolitical tensions and a flight to safety, a seemingly "counterintuitive" narrative emerged in the market: Bitcoin may be trading at a historically undervalued level compared to gold. This perspective goes beyond a simple price comparison between the two assets—it highlights the deeper contest between traditional finance (TradFi) and the crypto market over the "store of value" narrative. In this article, we’ll use quantitative models to break down the logic behind this claim, examine market divergences, and explore potential paths forward.
Bitcoin 66% Undervalued? The Story Behind a Counterintuitive Signal
On March 1, 2026, Samson Mow, CEO of Bitcoin technology firm Jan3, shared his view on social platform X: Bitcoin, when measured against gold’s market cap and the global money supply, currently sits about 24% to 66% below its long-term trend line, while gold shows signs of "overextension." The main tool behind this analysis is the Z-score model of the Bitcoin-to-gold ratio. As of March 2, 2026, the Z-score stood at approximately -1.03—not at a historic low, but already in negative territory. Mow noted that when the ratio’s Z-score drops below -2, it typically signals a major Bitcoin rally within the following 12 months.
Z-score of the Bitcoin-to-gold ratio. Source: TradingView
Record Gold Prices vs. Bitcoin Under Pressure: Why Is the Z-Score Model Flashing a Warning Now?
This debate unfolds against a backdrop of heightened macro and geopolitical sensitivity.
Gold breaks higher: On March 2, 2026, escalating tensions in the Middle East sent spot gold sharply higher at the open, briefly approaching $5,380 per ounce, with gold futures holding above $5,247. Ongoing central bank gold purchases (with net buying exceeding 1,100 tons in 2025) and the global de-dollarization trend have provided long-term support for gold prices.
Bitcoin under pressure: In contrast, the crypto market has been rattled by macro uncertainty and risk-off selling. According to Gate market data, as of March 2, 2026, Bitcoin (BTC) traded at $66,372.7, down 1.90% over 24 hours and nearly 50% off its all-time high of $126,080.
Key timeline events:
- March 2020: BTC/gold ratio Z-score drops below -2; Bitcoin bottoms near $3,717 and surges over 300% in the next 12 months.
- November 2022: The FTX collapse pushes the Z-score below -3; Bitcoin rebounds more than 150% over the following year.
- Late February 2026: Gold hits a new all-time high, BTC/gold ratio Z-score reaches -1.24, and valuation disagreements resurface.
What Does a -1.03 Z-Score Mean? Historical Backtesting Reveals a "Buy Zone"
This argument is grounded not in sentiment, but in statistical quantitative modeling.
Z-score model basics: The Z-score measures how many standard deviations a data point is from its mean. In the BTC/gold ratio analysis, a Z-score of 0 means the current ratio matches its historical average; a negative value indicates Bitcoin is undervalued relative to gold.
- Current reading: -1.03, signaling Bitcoin is trading below its historical norm versus gold, though not yet in the "deep undervaluation" zone (below -2).
- Historical triggers: The model shows that when the Z-score falls below -2, it often precedes a strong trend reversal. After the COVID crash in 2020 and the FTX collapse in 2022, Bitcoin rallied 300% and 150%, respectively.
Measuring the value gap: Samson Mow’s 24% to 66% undervaluation range is calculated by comparing Bitcoin’s market cap to gold’s and the global M2 money supply’s long-term trend lines. When gold prices spike sharply in the short term—such as during recent geopolitical crises—while the Bitcoin price stalls or pulls back, this trend gap widens dramatically.
Bullish vs. Bearish: Institutional Views Clash
There’s a clear divide in the market regarding the idea that "Bitcoin is undervalued relative to gold."
Bullish camp (model-driven):
This group relies on quantitative models, arguing that extreme valuation deviations create a powerful mean-reversion force. They cite historical data showing that buying when the Z-score is deeply negative often captures the following 12 months’ trend. In their view, gold’s "overextension" isn’t a negative for Bitcoin; instead, it could drive capital rotation from traditional safe havens (TradFi) into crypto assets.
Bearish camp (macro-driven):
Other analysts warn that the market structure has changed. Some suggest Bitcoin’s price action may be repeating the 2022 bear market pattern. If geopolitical risks lead to prolonged liquidity tightening, Bitcoin could fall toward $50,000. On-chain data also shows that if Bitcoin drops below the key $63,111 support, a "demand vacuum" below could accelerate the move lower.
Diverging sentiment: Market emotions have swung into extreme fear (the Crypto Fear & Greed Index recently hit a low), and both retail and some institutions are confused about what counts as "safe haven" versus "risk asset." Gold is being chased as a traditional safe asset, while Bitcoin has been sold off as a risk asset in the early stages of the conflict.
From "Safe Haven" to "Digital Gold": Is the Narrative Breaking Down?
When evaluating the "Bitcoin undervalued relative to gold" story, it’s important to separate facts, opinions, and speculation.
- Facts: The BTC/gold ratio’s Z-score is indeed negative, based on historical price data. Gold has also just set a new nominal all-time high.
- Opinions: Samson Mow interprets this undervaluation as a "potential buy signal," drawing on historical patterns—this is his personal assessment.
- Speculation: The idea that capital will rotate from "gold to Bitcoin" remains speculative. In the early stages of geopolitical crises, capital still flows first into assets with centuries of trust, like gold and the US dollar. Bitcoin’s "digital gold" narrative has yet to fully prove its safe-haven resilience under extreme stress.
What’s Next for TradFi Capital? Rethinking the Commodity Narrative
The deeper significance of this debate lies in its potential to reshape how TradFi institutions allocate assets.
Redefining commodity status: Gold is the archetypal commodity, with mature spot and futures markets. Bitcoin is often called a "digital commodity." If the BTC/gold ratio continues to fall and then rebounds sharply, it could reinforce Bitcoin’s status as an "alternative reserve asset" distinct from stocks and bonds.
Attracting TradFi capital: For traditional fund managers, statistical arbitrage and mean reversion are core strategies. If the "Bitcoin undervalued relative to gold" thesis gains traction through quantitative models, it could prompt TradFi capital to pursue "valuation arbitrage" via ETFs and other compliant channels, bringing significant new liquidity to the crypto market.
Implications for exchanges: In-depth discussions like this raise the market’s sophistication and attract more traders seeking high-conviction opportunities. Gate users who understand these models can gain clearer insights into the current market’s structural positioning.
Three Scenarios: Mean Reversion, Crisis "Double Whammy," or Structural Shift?
Based on current data and market structure, there are three possible scenarios ahead:
Scenario 1: Mean Reversion
If macro conditions stabilize, institutional capital may seize on this clear "value pocket." As the Z-score recovers from -1.24 toward zero, Bitcoin’s performance relative to gold should strengthen. This doesn’t require gold to fall—just that Bitcoin outpaces gold’s gains.
Scenario 2: Crisis Deepens, Triggering a "Double Whammy"
If geopolitical conflict spirals out of control and sparks a global liquidity crisis, all risk assets—including Bitcoin—could face indiscriminate selling. The BTC/gold ratio Z-score could drop below -2 or even -3, entering a zone of extreme undervaluation. While this would bring short-term pain, history suggests it could also set the stage for the next major bull market.
Scenario 3: Structural Regime Shift
If Bitcoin fails to regain ground against gold this cycle—or remains weak even as gold retreats—it would seriously undermine its long-term "digital gold" narrative. In this case, crypto assets could be repriced as "pure high-beta risk assets," losing their "quasi-safe haven" premium altogether.
Conclusion
Whether it’s a 24% value gap or a Z-score of -1.24, these are just snapshots of a complex market. They reveal that Bitcoin is trading at a historically cheap level versus gold, but they don’t provide a roadmap for a straight-line rally. In a market where narratives and reality collide, data serves as an objective map for traders—not a crystal ball for predicting the future. For Gate users, understanding how these models work may be more valuable than simply betting on a direction.
