Bitcoin Price Surge In 2024 Not Enough To Beat Gold’s Risk-Adjusted Returns – Details Here
09 Oktober 2024 - 1:00PM
NEWSBTC
According to Goldman Sachs, Bitcoin (BTC) price appreciation in
2024 failed to compensate for its price volatility risks.
Meanwhile, gold’s higher risk-adjusted returns reaffirmed its “safe
haven” narrative. Despite The Gains, Bitcoin Fails To Outshine Gold
The leading digital asset by reported market cap surged from
roughly $42,000 at the beginning of the year to as high as $73,000
in March 2024, recording more than 73% gains. At its current market
price of $62,790, BTC is still more than 40% up from its price in
January 2024. Related Reading: Bitcoin Correlation With Gold Now At
Highest Level Since March Notably, throughout 2024, Bitcoin has
consistently outperformed major equity indices, fixed-income
instruments, gold, and crude oil. However, according to
data tracked by Goldman Sachs, despite BTC’s impressive gains, its
price performance in absolute terms fails to compensate for its
volatility. The analysis by Goldman Sachs puts BTC’s year-to-date
(YTD) volatility ratio at just under 2%. In comparison, gold gave a
risk-adjusted return of 3%, posting strong 28% gains in absolute
terms. For the uninitiated, the volatility ratio measures the
return an asset generates for each unit of risk or volatility it
carries. A higher ratio indicates that an asset provides better
returns relative to the risk taken, while a lower ratio suggests
less efficient performance. The analysis notes that Bitcoin’s
volatility ratio was only better than Ethereum’s native ETH token,
S&P GSCI Energy Index, and Japan’s TOPIX index among the
non-fixed income growth-sensitive investments. Bitcoin’s low
volatility ratio compared to gold cements the latter’s claim as a
“safe haven asset.” This came under the limelight last week when
BTC slumped, and gold surged following Iran’s offensive against
Israel. Still A Long Way To Go For Bitcoin Since its inception
following the 2008 financial crisis, Bitcoin’s ascent to a
trillion-dollar market cap asset has been remarkable. The
fixed supply of 21 million, decentralized network architecture, and
halving every four years make BTC an appealing asset. However, the
market cap gap between Bitcoin and gold remains vast. That said,
several crypto analysts are confident that Bitcoin will outperform
the shining metal in the coming years. For instance, seasoned
analyst Peter Brandt recently made an ambitious prediction that by
2025, BTC could see its price jump 400% relative to gold. Related
Reading: Bitcoin On Brink Of Massive Breakout Like Gold In 2008:
Hedge Fund CEO Similarly, in August 2024, VanEck CEO Jan van Eck
stated that BTC could surge to $350,000 on the back of greater
adoption. Most recently, investment management firm BlackRock
declared Bitcoin a “gold alternative” due to its fixed supply and
increasing investor confidence in its ability to tackle inflation
and avoid value erosion during uncertain times. On the contrary,
billionaire Ray Dalio has expressed his opinion on the Bitcoin vs.
gold narrative, saying that BTC will never fully replace gold. BTC
trades at $62,790 at press time, down 2.3% in the last 24 hours.
Featured image from Unsplash, charts from ingoldwetrust.report and
Tradingview.com
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