Gold prices have staged a historic rally, climbing over 42% in the past year and touching a record $5,608 per ounce in January before pulling back. Yet, as global money supply growth reaccelerates, some analysts argue gold is still undervalued relative to the liquidity flood. This macro backdrop holds crucial implications for Bitcoin and the broader crypto market.
A chart shared by Rand Group, based on Fidelity data, illustrates the tight correlation between gold and global money supply expansion. Global money supply growth has rebounded above 9% after briefly turning negative in 2024, and gold’s price trajectory has followed closely. “Gold is up 42% in a year and it’s the DISCOUNT option. That’s how fast they’re printing,” Rand Group wrote. J.P. Morgan still targets $6,000 for gold by year-end, while UBS projects $5,900 and ANZ sees $5,600. Central bank buying—led by China, India, and Türkiye—alongside currency debasement and limited mining supply reinforce the bullish long-term thesis.
However, shorter-term headwinds are building. A separate report notes gold slipped on Tuesday as a firm U.S. dollar, rising Treasury yields (10-year above 4.3%), and growing Fed rate hike bets pressured the metal. The CME FedWatch Tool now shows a 40% chance of a quarter-point rate increase at the next meeting, up from 20% a month ago. Higher rates increase the opportunity cost of holding non-yielding assets like gold—and, by extension, Bitcoin.
For crypto investors, the message is twofold. The same liquidity expansion that fuels gold’s structural rally also underpins Bitcoin’s narrative as digital gold. Should central banks continue to inflate the money supply, both assets could benefit from a flight to scarcity. Conversely, if the Fed tightens further, both gold and Bitcoin may face downside pressure. As the market weighs these opposing forces, Bitcoin’s correlation with macro trends is likely to intensify.
