Gold Beats Bitcoin: Despite 2024 Rally, Bitcoin Falls Short of Gold in Risk-Return Metrics

Gold Beats Bitcoin: Risk-Adjusted Returns Tell a Different Story

This year, Bitcoin has increased by more than 40%, surpassing major equities indexes, fixed-income instruments, gold, and even oil, which saw a recent spike due to geopolitical concerns. But as Goldman Sachs’ research shows, its outstanding performance in absolute terms is insufficient to offset its volatility.

The industry-leading risk-adjusted return of approximately 3% for gold is greatly exceeded by the year-to-date return on volatility ratio of less than 2% for bitcoin. The return on investment is measured by the ratio about the risk/volatility unit. In absolute terms, the yellow metal has increased by 28%.

Bitcoin’s Volatility vs. Gold: Goldman Sachs Highlights Safe Haven Divide

The figure from Goldman’s report titled “Oil on the boil” on October 7th really reveals that the only non-fixed income growth-sensitive investments with a return to volatility ratio lower than Bitcoin are the native token of Ethereum, the S&P GSCI Energy Index, and Japan’s TOPIX index.

Crypto skeptics’ long-held belief that bitcoin is too volatile to develop into a safe haven like gold is validated by its very low risk-adjusted performance. Furthermore, it clarifies why, following Iran’s missile launch against Israel last week, which increased tensions in the Middle East, gold surged and bitcoin plummeted alongside equity markets.

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