Valuation Discrepancy Under New Gold Price Highs: Data Suggests Bitcoin May Be Undervalued by 66%

When gold breaks above $5,400 due to geopolitical conflicts and safe-haven demand, a seemingly “counterintuitive” voice emerges in the market: Bitcoin may be relatively undervalued compared to gold, possibly at a historic low. This is not just a simple comparison of asset prices but touches on the deep strategic contest between traditional finance (TradFi) and crypto markets over the “store of value” narrative. This article will analyze the logical basis, market disagreements, and potential evolution paths of this assertion using a quantitative model.

Is Bitcoin undervalued by 66%? The behind-the-scenes of a counterintuitive signal

On March 1, 2026, Samson Mow, CEO of Bitcoin tech firm Jan3, posted on social platform X that Bitcoin’s market cap relative to gold and global money supply is currently 24% to 66% below its long-term trendline, while gold shows signs of “over-expansion.” The main tool for this analysis is the Z-score model of the Bitcoin-to-gold ratio. As of March 2, 2026, the Z-score was about -1.03, not yet at extreme lows but already in negative territory. Mow pointed out that when the Z-score drops below -2, it typically signals a significant upward move for Bitcoin within the next 12 months.

Z-score of Bitcoin-to-gold ratio, source: TradingView

New high in gold vs pressure on Bitcoin: Why does the Z-score model sound the alarm now?

This discussion occurs amid highly sensitive macro and geopolitical tensions.

Gold price leads the surge: On March 2, 2026, amid escalating Middle East tensions, spot gold opened sharply higher, approaching $5,380/oz, with futures prices staying above $5,247. Ongoing central bank gold purchases (net over 1,100 tons in 2025) and de-dollarization trends provide long-term support for gold.

Bitcoin under pressure: Conversely, the crypto market remains volatile due to macro uncertainties and risk asset sell-offs. According to Gate data, as of March 2, 2026, Bitcoin (BTC) was priced at $66,372.7, down 1.90% in 24 hours, nearly halving from its all-time high of $126,080.

Key timeline points:

• March 2020: BTC/Gold Z-score drops below -2, Bitcoin bottoms around $3,717, then surges over 300% in 12 months.
• November 2022: FTX collapse causes Z-score below -3, Bitcoin rebounds over 150% in the following year.
• End of February 2026: Gold hits a new all-time high, BTC/Gold Z-score reaches -1.24, market shows valuation divergence again.

What does a Z-score of 1.03 mean? Historical backtests reveal a “buy zone”

The core support for this view is not emotion but a statistical, quantitative model.

Z-score principle: 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 indicates the current ratio equals its historical average; negative values suggest Bitcoin is undervalued relative to gold.

• Current reading: -1.03, indicating Bitcoin is priced lower relative to gold than its historical norm but not yet in “extreme undervaluation” territory (below -2).
• Historical trigger: When the Z-score drops below -2, it often signals a trend reversal. After the 2020 pandemic crash and the 2022 FTX collapse, Bitcoin gained 300% and 150%, respectively.

Valuation gap estimate: The 24% to 66% undervaluation range proposed by Samson Mow is derived from comparing Bitcoin’s market cap to gold’s and the global M2 money supply against their long-term trendlines. When gold prices spike rapidly (such as during recent geopolitical conflicts) while Bitcoin remains stagnant or declines, this valuation gap widens sharply.

Bullish vs. bearish: institutional perspectives on the “ice and fire” narrative

Market opinions diverge sharply on whether Bitcoin is truly undervalued relative to gold.

Bullish camp (model-based):

This group relies on quantitative models, believing that extreme valuation deviations exert strong mean reversion forces. They cite historical data showing that when the Z-score is deeply negative, buying tends to yield significant gains over the next 12 months. In their view, gold’s “over-expansion” is not bearish for Bitcoin but could be a catalyst for capital rotation from traditional safe havens to crypto assets.

Bearish camp (macro-focused):

Other analysts warn that market structure has changed. Some suggest Bitcoin’s price action may mirror the 2022 bear market, with risks of further decline to $50,000 if geopolitical tensions cause liquidity to tighten. On-chain data shows that if Bitcoin falls below $63,111—an important support level—there is a “demand vacuum” below, which could accelerate the decline.

Market sentiment is in extreme fear (Crypto Fear & Greed Index hit lows), with retail and some institutional players confused about whether to see Bitcoin as a safe haven or a risk asset amid conflict.

From “safe haven” to “digital gold”: Is the narrative being challenged?

When evaluating the “Bitcoin undervalued relative to gold” narrative, it’s important to distinguish facts, opinions, and speculation.

• Facts: The Z-score of BTC/Gold is indeed negative, based on historical data; gold prices have recently hit nominal all-time highs.
• Opinion: Samson Mow interprets this undervaluation as a “potential bullish signal,” based on historical mean reversion.
• Speculation: The idea that capital will shift from “gold to Bitcoin” remains speculative. During initial crisis phases, capital tends to flow into gold, USD, and other historically trusted assets. The “digital gold” narrative for Bitcoin has yet to be fully tested under extreme stress to prove its safe-haven resilience comparable to gold.

The next target for TradFi capital? Repricing of commodities

This discussion has deeper implications for how TradFi institutions might re-evaluate their asset allocation logic.

Redefining commodity attributes: Gold is a mature commodity with established spot and futures markets. Bitcoin is often called a “digital commodity.” If the BTC/Gold ratio rebounds strongly after a prolonged decline, it could reinforce Bitcoin’s status as an alternative reserve asset outside stocks and bonds.

Attracting TradFi funds: For traditional fund managers, statistical arbitrage and mean reversion are core strategies. If the consensus that “Bitcoin is undervalued relative to gold” spreads via quant models, it could trigger institutional capital flows through ETFs and other compliant channels, bringing significant incremental liquidity to crypto markets.

Exchange implications: Such in-depth discussions elevate market professionalism, attracting traders seeking high-confidence setups. Gate users understanding these models can better grasp the current structural positioning.

Three possible scenarios: mean reversion, crisis double-whammy, or structural reversal?

Based on current data and market structure, three future scenarios are conceivable:

Scenario 1: Mean reversion

If macro conditions stabilize, institutional capital will recognize the valuation gap. As the Z-score moves from -1.24 toward zero, Bitcoin’s relative performance should improve, driven by Bitcoin’s gains exceeding gold’s, without necessarily requiring gold to fall.

Scenario 2: Deepening crisis triggers double-whammy

If geopolitical conflicts spiral out of control, causing a global liquidity crunch, all risk assets—including Bitcoin—may be sold off indiscriminately. The BTC/Gold Z-score could fall below -2 or -3, entering extreme undervaluation. While painful short-term, historical patterns suggest this could mark the start of a new bull phase.

Scenario 3: Structural regime shift

If Bitcoin fails to recover its relative value against gold during this cycle, even as gold prices fall, it would undermine its “digital gold” narrative. This could lead markets to reprice crypto as purely high-risk beta assets, losing its safe-haven premium.

Conclusion

Whether it’s the 24% valuation gap or the -1.24 Z-score, these are just slices of a complex market. They reveal that Bitcoin is historically cheap relative to gold, but this does not guarantee a straight-line rally. In a landscape of intense narrative versus reality clashes, data provides an objective map rather than a crystal ball. For Gate users, understanding how these models work may be more valuable than simply betting on directions.