Bitcoin to gold price ratio reached its highest level since January

Bitcoin (BTC) is not only increasing in price when converted to USD, but it is also outperforming gold, a tangible asset with a centuries-old history. This situation appears in the context of concerns about the state of public finances in developed economies constantly appearing in the newspapers.

According to TradingView data, the Bitcoin to gold ratio - calculated as the price of 1 BTC divided by the price of 1 ounce of gold - has increased to 18.17 times, the highest level since January. Simply put, 1 Bitcoin is now equivalent to more than 18 ounces of gold. In the past two days, Bitcoin was traded around 80,000 USD on major exchanges.

Both assets are rising in price after an unattractive period, compared to the rising wave of AI-related stocks in the US and some parts of Asia. Experts say one of the reasons is the growing fear that governments, including the US, may have to rely on weakening or devaluing currencies to reduce debt burdens through inflation.

With the exception of Switzerland, every major developed economy has a debt-to-GDP ratio exceeding 100%. The US currently ranks first in the primary budget deficit - that is, the deficit after excluding interest payments. This index shows more clearly how much the government is spending in excess of revenue before taking into account the debt repayment burden.

For their part, policymakers are betting on economic growth to escape the debt burden, rather than narrowing the deficit through austerity policies. "The world is drowning in debt... and the only way for us to get out of this situation is to grow to get ourselves out of it," US Treasury Secretary Scott Bessent said at the G20 finance ministers meeting in North Carolina, on August 31.

Anthony Scaramucci, founder of SkyBridge Capital and long-time Bitcoin advocate, immediately used this statement as a promotion. According to him, the US Treasury Secretary stood before the G20 and said that the world is drowning in debt and the entire argument supporting Bitcoin lies in that statement.

"20 finance ministers just created the best Bitcoin ads of the year, even though none of them intended to," Anthony emphasized.

Some other people also agree with this point of view. The main argument of cryptocurrency advocates is that Bitcoin is outside the traditional financial system and unlike USD, yen, euro or other fiat currencies, Bitcoin cannot be devalued by a single policy decision.

The positive view on the prospects of the world's largest cryptocurrency is also reinforced by large inflows. Bitcoin spot ETFs in the US collected about 277 million USD on September 3, after 4 working sessions alternating between inflows and outflows. ETF is the main tool for large financial institutions and organizations to participate in the cryptocurrency market.

Investors generally also bet that the likelihood of the US Federal Reserve (Fed) raising interest rates this month is about equal, down from above 63% at the beginning of the week, according to the CME FedWatch tool. This has pulled bond yields back down and sent buyers turning to riskier assets across the market. Fed Governor Christopher Waller initiated the move, saying he would support keeping interest rates unchanged if price pressures continued to ease.