WGC Report Provides Comparison Between Bitcoin and Gold

SEATTLE (Scrap Monster): A group of market researchers have been promoting the use of bitcoin as an “inflation hedge” or a store of value, with some even citing bitcoin as “digital gold”. On the contrary, several researchers and journalists are seen opposing this view, saying that bitcoin is not the new gold.

The World Gold Council (WGC) recently published a report that compares the above key asset classes- bitcoin and gold. The report by Joseph Cavatoni, Senior Market Strategist- North America and John Reade, Senior Market Strategist-Europe and Asia noted that the best way to compare bitcoin and gold is to analyse the returns of both the assets.

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Over the past five year period, both these asset classes have provided strong returns. Bitcoin has offered significant upsides as well as downsides sometimes. In terms of volatility, gold and bitcoin are at the opposite ends of the spectrum, with gold being less volatile, in comparison with bitcoin.

The report states that gold provides a unique impact on a diversified portfolio, especially in times of increased stress in market conditions. An analysis of past five year data indicates that gold’s performance provides positive correlation in up markets, and negative correlation in down markets. Also, gold allocation reduces volatility and provides improved returns, whereas increased bitcoin allocation results in higher risk.