According to BlockBeats, Fidelity's Global Macro Director, Jurrien Timmer, has analyzed the dynamic relationship between Bitcoin and gold, suggesting that Bitcoin could soon surpass gold.
Using data from Fidelity Management & Research Company and Bloomberg, Timmer examined the changing trends in the Sharpe ratios of these two assets, which measure risk-adjusted returns. He noted that their relative performance could be at a turning point.
Timmer highlighted the negative correlation between gold and Bitcoin, noting that their Sharpe ratios have alternated in leadership positions recently.
He commented:
"It seems that Bitcoin could take the lead next, as its Sharpe ratio is currently -0.40, compared to 1.33 for gold. We might witness a shift from gold to Bitcoin."
The shared data indicated that the recent return of gold was $22.51, while that of Bitcoin was $13.22. The return of gold was amplified four times to reflect its lower volatility, while the return of Bitcoin remained unadjusted.
Timmer also discussed the psychological and behavioral aspects of investing in Bitcoin, describing its volatility and unpredictability as inherent traits. He compared Bitcoin to having a dual personality of "Dr. Jekyll and Mr. Hyde."
According to Timmer, Bitcoin performs better when both the money supply (M2) and the stock market are expanding, due to its dual appeal as a speculative asset and a store of value. In contrast, he noted that gold offers more stability with its singular attribute. Timmer acknowledged the legitimacy of Bitcoin in the current monetary landscape, calling it a "modern invention that aspires to be sound money in an era of loose monetary policy."