July has officially begun, bringing the hedging story back into focus.
At the macro level, volatility is starting to rise again. On July 8th, the ceasefire between the US and Iran collapsed, sending Bitcoin back to the $62,000 level and wiping out $300 million of long positions shortly after the news broke. At the same time, the price of oil jumped by more than 4%, regaining the level of $75 per barrel for the first time since its loss in mid-June.
While US President Donald Trump later said Iran was open to another round of negotiations, the damage to risk sentiment had already been done. At PolyMarket, the odds of oil trading above $80 a barrel this month rose from just 13% to 65%, reflecting growing expectations for further geopolitical escalation and tightening of energy markets.
It is worth noting that the shift is already evident across the aggregate data.
According to FedWatch, the probability of a rate hike at the next Federal Open Market Committee meeting has risen to 29.4%, the highest in more than a month. The move signals that markets are starting to price in a more hawkish Fed as higher oil prices add to new inflation fears.
Naturally, this adds another layer of pressure on Bitcoin (BTC). On-chain data already shows that 50% of Bitcoin supply is now underwater, marking the biggest decline in months. With market sentiment already fragile, any further macro shock could quickly accelerate downward volatility, leading to market-wide capitulation.
Against this background, the seasonal setup between gold and… Bitcoin He returned to focus. Historically, both assets have performed well in July, putting the BTC/XAU ratio at the center of attention. If overall FUD continues to build, the ratio could provide an early read on whether capital will continue to rotate into Bitcoin or shift back toward gold as the preferred hedge.
The Bitcoin/Gold ratio emerges as the most important macro signal for July
Constant macro fluctuations are what characterize this cycle.
Setup is fairly simple. Historically, both Bitcoin and gold tend to outperform in July. But this time, the background is completely different. Renewed geopolitical tensions have refocused interest rate hike expectations, forcing investors to choose between risk and safety rather than chase both.
As the chart below shows, Bitcoin posted strong returns in July even during weaker market cycles. In 2018 and 2022, Bitcoin rose by 20% and 17%, respectively. As BTC enters July of this year after bouncing from the cycle low of $57k, seasonality continues to favor the bulls. Key takeaway? Gold shows a similar pattern.
According to Al Qubaisi’s message, gold is present middle July is up 1.5% over the past 20 years, making it the second strongest month of the year. With both assets entering a historically strong month, the BTC/XAU ratio naturally becomes the metric to watch. So far, the flows are still in favor of Bitcoin.
Technically, the Bitcoin/Gold ratio is already up more than 4.5% this month, showing that Bitcoin continues to outperform gold despite the return of macro volatility.
The question now is whether this trend can continue. If geopolitical tensions continue to push oil higher and interest rate hike expectations continue to increase, the balance could quickly shift toward gold, making the BTC/XAU ratio one of the clearest measures of capital turnover this month.
Final summary
- The BTC/XAU ratio has risen more than 4.5% this month, showing that Bitcoin is still outperforming gold despite increasing macro uncertainty.
- If overall risks continue to accumulate, the BTC/XAU ratio could reveal whether capital will remain in Bitcoin or shift back to gold.
