Analysis of the Relationship Between Bitcoin and Gold: Perspective from Jurrien Timmer
Jurrien Timmer, global macro director of Fidelity Investments, published an important article about the dynamic relationship between Bitcoin and gold. Using data from Fidelity Management and Research Company and Bloomberg, he analyzed the changes in the Sharpe Ratio - a metric for risk-adjusted returns of these two assets.
Despite an inverse correlation, gold and Bitcoin are experiencing alternating Sharpe Ratio fluctuations. Bitcoin may lead when its current Sharpe Ratio is -0.40, compared to gold's 1.33. This could be the moment Bitcoin overtakes gold.
Timmer advises investors to start with a portfolio consisting of four parts gold and one part Bitcoin. Although they have similar Sharpe Ratios, gold has volatility only a quarter of Bitcoin's. This helps optimize returns in a volatile market environment.
The above content is for informational market purposes and should not be considered investment advice.
