This Chart Illustrates Bitcoin’s (BTC) Bull Market vs. Gold (XAU) Likely to Intensify as U.S.-China Trade Relations Improve

In recent weeks, bitcoin has shown impressive gains compared to gold, with the potential for further upward momentum.

This positive outlook is bolstered by favorable changes in the bitcoin-to-gold ratio, which compares the price of BTC in USD to the price of an ounce of gold, alongside the easing trade tensions between the U.S. and China.

Notably, the ratio has emerged from an inverse head-and-shoulders pattern, which is a well-known reversal setup featuring a deep trough with two smaller adjacent troughs. This breakout signifies a shift from a downtrend to an uptrend, indicating that bitcoin may continue to outperform gold.

Last week, the ratio surpassed the key trendline, and analysis suggests it might increase to a minimum of 35.00, up from 32.00. This projection comes from adding the distance between the lowest trough and the trendline to the breakout point, indicating a likely rise for Bitcoin in relation to gold.

The optimistic technical formation aligns with historical data indicating that BTC often catches up with gold during price surges.

Gold hit a record high over $3,500 on April 22, but has since retreated by more than 8% to $3,211, according to data. In contrast, BTC has surged nearly 19%, reaching $104,000 in the same timeframe.

As the U.S. and China announced a reduction in trade tensions this week, gold may see a decrease while the renewed appetite for risk could boost BTC prices.

The two governments have agreed to lower tariffs on goods from both nations, as stated in a joint declaration made in Geneva. Specifically, China plans to decrease tariffs on American goods from 125% to 10% over a 90-day period. Simultaneously, the U.S. aims to cut tariffs on Chinese imports from 145% to 30%.

According to a co-founder of a crypto exchange, the reduction in tariffs is likely to lead to a more risk-on environment, benefiting both cryptocurrencies and stocks as investor confidence and global capital flows return.

He mentioned that the optimism stems from a shift in the larger economic context, with the U.S. securing trade agreements with both China and the UK, and upcoming discussions between leaders to consider a ceasefire, which has positively affected global risk sentiment, including in the crypto market.