TradingIndian

An investor's perspective of Bitcoin v/s Gold


I am trying to answer questions of #bitcoins v/s #Gold debate from an #investor perspective. What if #Gold was currency used to buy #Bitcoin ? What will be the impact of a #Fifty50 #portfolio of #BTCXAU?

Feel free to #retwit #Like #share & #follow

#TradingView to the rescue. The #chartidea shows #BTCUSD represented in #XAUUSD terms. Allow me to "coin" the word #BTCXAU

To start with, some facts and important points on timeline


The chart shows this ratio in daily timeframe . On September 15, 2017 #BTCXAU made the first major break out from 2.50 oz of gold per bitcoin . After peaking on December 17, 2017 the ratio crashed back to 2.50 oz.

With intermediate peak in June/July 2019 at ~9.50 oz, it collapsed again to 2.50 oz. Eventually the big bitcoin moment came on March 13, 2020. #COVID19 brought #CryptoMarket rally which brought #BTCXAU to above 37 oz on April 14, 2021.

Putting this in perspective. If you invested in #BTC directly using your #USDollar you would have paid $5600 on March 13, 2020 v/s 3.68 oz of #Gold and if sold at the peak on April 14, 2021, you would have got $62,986 v/s 36.27 oz of #Gold.

That means, in #USD terms, you would have made 11.25 times your money and in #Gold terms, you would have made 9.86 times your money. So the #Delta of 14% represents the growth in #Gold.

Of course, if you were smart, informed and/or lucky enough to pick the bottom and top, #Bitcoin beat #Gold hands down.

However, the real fun started from the #Bitcoin #AllTimeHigh on November 10, 2021 at $69,000 which translated to 37.41 oz of #Gold.

As of today, June 6, 2022, #BTCUSD touched low of $20,079 or 11.11 oz of #Gold. So from that #ATH, it has dropped -71% in #Dollar terms but also -70% in #glitter terms, interestingly removing the delta it showed while going up.

So if you created a #Fifty50 portfolio of 1 #BTCUSD and 3.56 #XAUUSD on March 13, 2020 and sold off both on November 10, 2021, you would have made 562% return on the portfolio v/s 1113% in #BTCUSD alone or 22.89% in #XAUUSD alone.


Interestingly, if you invested in the same portfolio at the peak on November 10, 2021, today you will be -66% on #BTC alone v/s -33% on a combined portfolio v/s -1.5% on #XAUUSD #Gold alone


The lessons I take from this are very simple

  • #BTC likens growth stock providing high beta return and #Gold likens value stock providing store of value
  • I should be invested in both in varying proportions based on risk sentiment and market conditions
  • I should ignore all those promoting #Crypto as #digitalgold because #BTC is definitely not store of value
  • I should equally ignore all those promoting #Gold as ultimate investment / store of value etc etc because I wouldn't be making any money on that
  • Nothing can beat the classical portfolio investing thinking of a balanced portfolio with nice averaging
  • Rebalance your portfolio every quarter or month based on the market conditions
  • Trade, speculate, gamble but never invest in 2nd rated instruments in the given space like #altcoins in #CryptoSpace
  • I can never go broke taking profits. I only go broke for #Hodling. So never hesitate to sell to book profits or stopping further losses.

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