Key Points
- Bitcoin’s performance has surpassed that of gold, with the Bitcoin to Gold ratio nearing its all-time high.
- Weak correlation between Bitcoin and gold suggests Bitcoin spot ETFs could be a viable alternative to gold investments.
Bitcoin and gold have long been compared, with the former often referred to as “Digital Gold”. However, recent data suggests that Bitcoin is outperforming its tangible counterpart.
Bitcoin Outperforms Gold
The Bitcoin to Gold ratio, an indicator of the relative performance of the two assets, has seen a significant increase since the start of the year. This rise is nearing the all-time high reached during the 2021 bull market peak, according to data from Kaiko.
This growth in Bitcoin’s value has been supported by the launch of spot exchange-traded funds (ETFs) in the U.S. this year. Since their listing in January, these ETFs have seen inflows of $12 billion. This high demand has propelled Bitcoin to new heights, with the cryptocurrency’s value increasing by more than 50% since the beginning of the year.
Gold’s Performance Lags Behind
In contrast, gold has only seen a growth of 4.71% year-to-date. Additionally, physically-backed Gold ETFs have seen net outflows recently, according to the World Gold Council. This suggests that investors are moving their capital from gold to Bitcoin.
The correlation between Bitcoin and gold has remained weak, fluctuating between a positive and negative 0.15 over the past decade. This indicates that the factors influencing demand for each asset differ significantly. If this weak correlation continues, Bitcoin spot ETFs could become a more attractive investment option than gold.
JPMorgan analyst Nikolaos Panigirtzoglou has noted that when adjusted for volatility, Bitcoin has already surpassed gold in investors’ portfolio allocation. This could signify a shift of capital from gold to Bitcoin.
