Bitcoin’s Price Performance: A Detailed Analysis
The current state of the Bitcoin price has sparked speculation about whether the cryptocurrency is truly outperforming other assets or if it’s actually underperforming in comparison. This analysis delves into the numbers, comparing various cycles and examining Bitcoin’s performance not just against the US dollar, but also against assets like Gold and US tech stocks to provide a more accurate picture of its standing.
Previous Bitcoin Price Cycles
Looking at the Bitcoin Growth Since Cycle Lows chart, the data initially appears promising. From the lows at the end of the last bear market, Bitcoin has seen returns of around 634% at the time of writing. These significant gains are supported not only by price action but also by strong fundamentals. Institutional accumulation through ETFs and Bitcoin treasury holdings has been robust, and on-chain data indicates a large proportion of long-term holders are not taking profits. This sets the stage for a strong run-up phase late in the bull cycle, similar to previous cycles.
Current Bitcoin Price Cycle
In terms of stability, the current Bitcoin price cycle looks favorable. The deepest retracement this cycle has experienced is around 32%, which occurred after surpassing $100,000 and pulling back to approximately $74,000–$75,000. This is much milder compared to the 50% or greater drawdowns seen in past cycles. While reduced volatility may mean reduced upside potential, it also makes the market less risky for investors. The price structure has followed a “step-up” pattern, with sharp rallies followed by choppy consolidation before another rally pushes towards new all-time highs. Fundamentally, the market remains strong.
Bitcoin Price vs Other Assets
When comparing Bitcoin to assets like the NASDAQ or other US tech stocks, a different picture emerges. In this current cycle, Bitcoin’s climb beyond the previous high has been minimal. However, the chart shows Bitcoin is currently turning prior resistance into support, setting the stage for a sustained move higher. Looking back at the previous double-top cycle, a second peak at a significantly lower level suggests that Bitcoin’s previous peak may have been driven more by global liquidity expansion and fiat currency debasement than genuine outperformance.
The comparison of Bitcoin to Gold, often referred to as “digital gold,” reveals that Bitcoin has yet to surpass its previous all-time high from the 2021 peak when measured in Gold. This means an investor who bought Bitcoin at the 2021 peak and held until now would have underperformed compared to simply holding Gold. Despite Bitcoin vs Gold returning over 300% since the last cycle lows, Gold itself has been on a powerful bull run.
True Purchasing Power
Adjusting the Bitcoin vs Gold chart for Global M2 money supply expansion paints a more sobering picture. When considering the significant liquidity injections into the global economy in recent years, Bitcoin’s cycle peak price in “liquidity-adjusted Gold” terms is still below the prior peak. This lack of real purchasing power highlights the absence of a new high, explaining the lack of retail excitement.
Conclusion
While Bitcoin’s bull market has seen impressive gains in dollar terms and a relatively low-volatility climb, comparisons to assets like US tech stocks or Gold, especially when adjusted for Global Liquidity expansion, suggest less extraordinary performance. The data indicates that much of this cycle’s rally may have been fueled by fiat debasement rather than pure outperformance. While there is potential for significant upside if Bitcoin breaks through liquidity-adjusted resistance and reaches higher highs, investors should closely monitor ratio charts for insights into relative performance and clues about future price movements.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always conduct your own research before making any investment decisions.
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