As volatility continues and upward attempts stall, more and more analysts are beginning to openly discuss the possibility of Bitcoin transitioning into a bear market phase. Sentiment on the derivatives and spot markets has become noticeably more cautious and risk appetite continues to decline.
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In this context, a recent report from Darkfost draws attention to a well-known but controversial story: capital rotation from gold to Bitcoin. With gold hitting a new all-time high above $4,420 per ounce, the idea that investors will soon shift their capital to Bitcoin is resurfacing in the market.
Historically, this narrative has gained momentum during periods when traditional safe havens outperform, fueling speculation that Bitcoin could follow suit as an alternative store of value.
However, Darkfost warns that this assumption is far from well-founded. While the rotation thesis has been widely reiterated throughout this cycle, the empirical evidence directly linking gold’s outperformance to sustained Bitcoin inflows remains weak.
Rather than signaling an impending bullish turn, the current setup suggests Bitcoin remains vulnerable, caught between macro-driven narratives and a deteriorating internal market structure.
Testing the rotation thesis from gold to bitcoin
Darkfost emphasizes that the popular narrative that capital is rotating from gold to Bitcoin lacks direct, verifiable evidence. To address this, he conducted a comparative analysis frame to identify periods when such rotations may have occurred. He did this without assuming any causal relationship. The core problem, as he notes, is that on-chain and market data cannot conclusively prove that capital leaving gold is the same capital entering Bitcoin.
To approach potential rotation phases, Darkfost applied a simple but disciplined signal structure. A positive signal appears when Bitcoin trades above its 180-day moving average, while gold trades below its own 180-day moving average. In theory, this configuration suggests that relative strength is shifting towards Bitcoin. Conversely, a negative signal is given when both Bitcoin and gold trade below their respective 180-day moving averages. Indicates a broad risk-off environment rather than a rotation.
This methodology allows historical comparison between cycles, highlighting moments when relative performance diverged. However, the results question the simplicity of the story. As the graph shows, these signals do not produce consistent or reliable results. In several cases, the supposed rotation periods failed to generate a sustainable advantage for Bitcoin. At other times, Bitcoin recovered independently of the gold trend.
The conclusion is clear: capital rotation between gold and Bitcoin is not an absolute or mechanical process. Market behavior seems much more nuanced. Driven by broader macro conditions, liquidity dynamics and investor positioning, rather than simple asset-to-asset rotation.
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Price battle among the major moving averages
Bitcoin is trying to stabilize after a sharp correction phase, but the chart highlights that price action remains structurally vulnerable. BTC is currently trading just below the $90,000 level, an area that has turned from support to near-term resistance after the recent collapse. While the latest rebound shows short-term buying interest, it has not yet changed the broader bearish structure that has formed after the October highs.
From a trend perspective, Bitcoin is now trading below the 50-3D moving average (blue), which is starting to slope downward, indicating weakening momentum. The inability to regain this level suggests that the recent upward moves are corrective rather than impulsive.
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Below current price, the 100-3D moving average (green) is near the $85,000-$86,000 zone and has acted as interim support during the recovery. A sustained loss of this area would likely expose BTC to a deeper retracement towards the 200-3D moving average (red), which is currently rising near the low $80,000 region.
The sell-off was accompanied by higher volume. While the recovery occurred on the back of relatively lighter participation, indicating a lack of conviction among buyers. Structurally, Bitcoin is consolidating in a lower range. With lower highs and compressed volatility signaling a pause rather than a trend reversal.
For bulls, regaining and holding above $90,000 and the declining 50-3D moving average is crucial to negate the bearish bias. Until then, price action favors trading within a certain range, where downside risk is still present.
Featured image of ChatGPT, chart from TradingView.com
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