showed its luster during the first half of 2020 by rallying more than 27% percent amid mediocre returns from precious metals including gold, silver and platinum.
Gold underperformed bitcoin by nearly 11 percentage points despite gaining 16 percent in the first half of 2020 and making eight-year highs in late June. Silver and platinum both finished the first half of 2020 with negative gains.
Bitcoin’s strong performance is no shock to some analysts, especially in context of the benchmark cryptocurrency’s with equity markets. “Given that equities are now near, or in some cases above, their highs reached in February, it’s not surprising to see bitcoin do the same,” said Ryan Watkins, bitcoin analyst at Messari.
Why compare returns from bitcoin to gold or other precious metals? “Gold is bitcoin’s most aspirational asset,” explained Watkins. “Like bitcoin, gold is a scarce commodity whose value is derived almost entirely from its monetary premium.”
Unlike gold, however, bitcoin investors have historically experienced more extreme volatility. Silver and platinum were also much more volatile than gold through the first half of 2020.
Bitcoin and gold could be seen more like complementary investments than competitives ones based on their performance over the past six months, said David Lifchitz, managing partner at Paris-based quantitative cryptocurrency trading firm ExoAlpha. Given bitcoin’s historic volatility, holding “digital and physical gold together” could provide a better risk-return profile than holding either of them individually, said Lifchitz.