Fidelity Executive Predicts Bitcoin Could Overtake Gold's Dominance
Jurrien Timmer, Director of Global Macro at Fidelity Investments, has analyzed the Sharpe Ratios of gold and Bitcoin, which measure risk-adjusted returns. According to Timmer, the Sharpe Ratios indicate a potential turning point in the relative performance of both assets.
Key Findings
- Gold and Bitcoin have historically shown a negative correlation, with each asset taking turns outperforming the other.
- When comparing the historical prices of Bitcoin and gold on a 1:1 basis, Bitcoin has dominated. However, when scaling gold's performance by a factor of 4 to account for its lower volatility, the two assets appear more similar.
- Timmer suggests that Bitcoin may be poised to take the lead, given its current Sharpe Ratio of -0.40 compared to gold's 1.33.
Implications
- If Bitcoin's Sharpe Ratio continues to improve, it could potentially overtake gold's dominance in the market.
- Timmer's analysis implies that Bitcoin's risk-adjusted returns may become more attractive to investors, potentially driving up demand and prices.
