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.

Find my daily analysis + trades live & FREE 🆓 💰

Learn my strategy and get indicators & tools 👉🏼

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.