Even the Mag 7 have come way down in terms of valuation, following their 17% drawdown since last October’s high. The cohort is now trading at a modest 25x forward P/E.

Bitcoin has been very resilient in recent weeks, and we can see below how the 52-week Z-score has been recovering (along with ETH) while the rest of the asset class spectrum has been weakening. The outlier there of course are commodities (BCOM).

It has been my view all along that Bitcoin is an aspirational junior player on the hard money team (led by gold), and not the end-all-be-all store of value that is going to “eat” all other asset classes. Gold has been and, in my view, will always be the quarterback on this team, and Bitcoin along with silver are secondary plays. As such, they may take turns leading the ups and downs, and just like we look at the gold/silver ratio (or the gold/miners ratio) we could consider the gold/Bitcoin ratio. To me, that’s the lens through which we should evaluate Bitcoin. In fact, there may be a valuable indicator lurking here as we ponder when and where Bitcoin will find its floor. The chart below shows Bitcoin and its power law curve. We can see that the $60k level is a support level based on previous highs and lows as well as where the power law support curve is (or will be after a few months of backing and filling). Now look at the bottom panel. This shows the Z-score of the gold/silver ratio (blue) as well as the gold/Bitcoin ratio (orange). While gold is “cheap” compared to silver, it’s “expensive” compared to Bitcoin. We are not quite at the extremes seen at previous inflection points but we are getting close. It gets better. Taking a close-up look below, we can also see that the gold/Bitcoin Z-score has produced valuable divergences at past extremes. At both the 2021 and 2025 tops, the Z-score triggered a bearish divergence at the new Bitcoin highs, and it flashed a bullish divergence at the 2022 low. We don’t have such divergence yet, plus at 91% the signal itself is not yet at the extremes seen at past lows. This suggests to me that Bitcoin will need to spend more time backing and potentially filling at the $60-$70k level, and perhaps even slightly undercut it, to satisfy both the time and price elements of a mild Bitcoin winter. Speaking of winter, good luck out there!

The consensus going into 2026 seems to be that the US will run it hot, from a combination of fiscal policy and a dovish Fed. The output gap (actual GDP vs potential GDP ) is now the highest in 25 years. And more dovish Fed (about to get even more dovish) is cutting rates well beyond what seems to be justified by either inflation or employment (per various iterations of the Taylor Rule below). Run it hot!