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Why Bitcoin Is Undervalued Compared to Gold and Equities

Bitcoin is underperforming while gold and equities surge, yet on-chain data suggests the market is mispricing Bitcoin. Analysts point to undervaluation and a potential rebound ahead.

Bitcoin’s price performance in recent months has surprised many investors. While gold and global equity markets have climbed higher, Bitcoin has moved in the opposite direction with a noticeable decline. According to on-chain analysts, including a recent report from Santiment, this price drop does not reflect weakness. Instead, it suggests that Bitcoin is significantly undervalued when compared to traditional assets.

This valuation gap may represent one of the most overlooked opportunities in the current financial landscape.

Table of Contents

Gold Is Rising. Stocks Are Rising. Bitcoin Is Falling. Here Is Why That Matters

For years, Bitcoin has shown a loose four-year correlation with the S&P 500 and other major equity indices. When investor confidence improves, Bitcoin usually rallies alongside stocks. When markets become fearful, Bitcoin typically cools down.

However, since August something different has happened.

  • Gold has gained more than 21 percent

  • The S&P 500 has gained around 7 percent

  • Bitcoin has fallen approximately 15 percent

Instead of moving with the broader surge in confidence, Bitcoin has become an outlier. Analysts believe this is not due to weakening fundamentals, but to short-term sentiment and uncertainty. As a result, the market price does not currently reflect the true value of the asset.

On-Chain Data Suggests Bitcoin May Be Near a Local Bottom

To determine whether an asset is undervalued or overvalued, analysts look beyond price charts and into blockchain metrics. One of the most influential indicators for Bitcoin is the Net Unrealized Profit and Loss score, also called NUPL.

A recent NUPL reading of 0.476 places Bitcoin in the belief to optimism correction zone, an area that historically aligns with accumulation phases before major price reversals. In the past, every time Bitcoin has returned to this zone it has eventually recovered and reached new highs.

This suggests that market fear may not match Bitcoin's real value.

Selling from Long-Term Holders Is a Short-Term Negative and a Long-Term Positive

Part of the recent pullback has been driven by profit-taking from long-term holders. This selling does create short-term pressure, but it also resets the market structure in a healthy way. It removes leveraged excess, resets funding rates and redistributes supply.

After this type of sell-off slows down, Bitcoin often transitions into a fresh period of accumulation followed by strong upside movement. Many analysts believe the market is approaching that transition.

Institutional Demand Could Correct the Undervaluation

Bitcoin’s undervaluation will not fix itself without capital inflow. Two major forces have the power to drive a correction in valuation.

Catalyst

Expected Impact

Spot Bitcoin ETF inflows

Creates consistent long-term demand

Institutional accumulation

Adds liquidity, scarcity and price support

Institutional buyers tend to look for assets that trade below their fundamental value. If Bitcoin continues to lag behind gold and equities while maintaining strong fundamentals, professional investors may rotate capital into Bitcoin.

Why Bitcoin Could Catch Up and Potentially Outperform

If macro sentiment improves and capital begins flowing into Bitcoin again, the digital asset has more upside potential than gold and equities simply because it declined while other risk assets rallied.

Gold and the S&P 500 are already pricing in optimism.
Bitcoin is not.

History shows that undervaluation periods can lead to two scenarios:

  1. Bitcoin catches up to the performance of gold and equities

  2. Bitcoin overshoots during the next growth cycle and outperforms both

Temporary underperformance is not always a sign of weakness. Sometimes it is the setup for future strength.

Conclusion

Bitcoin appears undervalued compared to gold and equities not because its fundamentals have weakened, but because market psychology has disconnected from long-term value. Multiple on-chain indicators, supply distribution patterns, and ETF dynamics point toward a temporary mispricing rather than a structural decline.

If historical patterns continue, this phase may ultimately be viewed as a moment of opportunity rather than a moment of capitulation.

FAQs

Why is Bitcoin underperforming compared to gold and stocks right now?

Short-term selling from long-term holders and uncertainty in macro conditions have weighed on Bitcoin even as fundamentals remain strong.

Does Bitcoin’s price decline signal the end of the bull market?

Not necessarily. On-chain metrics indicate that Bitcoin is likely in a mid-cycle correction rather than at the end of a long-term trend.

What could trigger Bitcoin’s next major rally?

ETF inflows, renewed institutional accumulation and improved investor confidence are the most likely triggers.

Is Bitcoin undervalued at the current price?

Based on blockchain valuation models and its divergence from other major assets, many analysts believe the market is currently pricing Bitcoin lower than its true value.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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