on the crypto
When an investor plans the composition of his portfolio, there is always a choice to be made between Bitcoin and gold. Because metal and cryptocurrency have similar hedging, limited supply, and safe haven characteristics, these assets are often used to balance bottomless assets such as stocks, bonds and cash. But does one surpass the other?
An analysis of 2020 returns
Looking solely at this year's returns, there may be reasons for both Bitcoin and gold. For example, gold rose to a record high this year, up 20%, and did not experience any significant drop during March sales, dropping less than 4%.
On the other hand, Bitcoin grew 61% over the year, but saw a much larger decline, over 45% in March. The big picture numbers indicate that Bitcoin has both great risks and great rewards attached to it.
But instead of looking at the extremes, let's focus on the average. On an annual average, gold clearly outperformed Bitcoin, due to the metal's stability coupled with a run in the second quarter of the year as countries started fine-tuning their economic stimulus packages. Analyzing this parameter exclusively, of the two, gold is clearly the only winner.
However, the massive and steady rise in cryptocurrency following its March crash resulted in bitcoin seeing the highest average surge so, in fact, bitcoin outperformed gold in this regard.
Trend of gold and Bitcoin
Gold started the year with a price of $ 1.521, and is now just above $ 1.900, with an annual average of $ 1.735 at the end of September, which represents a 14,5% jump from the average. On the other hand, Bitcoin started the year at $ 7.200, and is now at $ 11.300, with an annual average of $ 8.500 at the end of September, a jump of 18,2%.
Bitcoin has overtaken gold as an investment since May, thanks to its steady rise. Gold, on the other hand, saw growth in the weeks between July and August, pushing its price above $ 2.000, but that wasn't enough to overtake the cryptocurrency - here the quotation in real time.
As an investment, Bitcoin could have plummeted significantly more than gold in March, peaking up to 80% below its average. However, it has been well over 10% since June when the recovery began, and this happened as the slowdown in commodities markets kicked off and gold dipped below $ 1.900.
In conclusion
The big picture could show gold as a better investment due to its strong and positive annual return and Bitcoin as a volatile (but rewarding) investment due to its severe March slump. However, when measured against its daily swing, Bitcoin wins over gold, as it has a better return on investment on average. So, carefully and carefully evaluate your safe haven!
