In recent months, a convergence in the risk-adjusted performance of Bitcoin and gold has been observed, signaling changes in investor sentiment. This provides a relevant context for discussing the potential complementary use of these assets in investment portfolios.
Comparing the Performance of Bitcoin and Gold
According to Jurrien Timmer, Fidelity's Global Macro Director, there is a noticeable narrowing of the gap between the Sharpe ratios of Bitcoin and gold. Over the past year, gold has recorded 67 record closes and is up 33%, while Bitcoin has recovered nearly 25% since its April lows.
Asset Portfolio Allocation
At current prices, with gold around $3,213 per ounce and Bitcoin near $103,600, a preferred portfolio balance of 4:1 in favor of gold appears to exhibit similar volatility and cumulative returns, suggesting that these assets can be considered as complementary in a value-storing strategy.
Investment Perspectives Amid Uncertainty
While there are positive signs for the complementary use of Bitcoin and gold, caution is warranted. Bitcoin's Sharpe ratio remains in negative territory, and potential risks, such as regulatory crackdowns and liquidity issues, could reopen the divergence. Nonetheless, current data suggests that the digital gold narrative may be regaining strength.
In the face of financial market fluctuations, the convergence of risks between Bitcoin and gold may open new horizons for investors. However, possible risks should be considered in the decision-making process.
