Why a 4:1 Gold-to-Bitcoin Investment Mix May Offer Balanced Risk and Return

According to Fidelity’s Global Macro Director Jurrien Timmer, the move coincides with a narrowing gap between the risk-adjusted performance of Bitcoin and gold — a dynamic that could signal a shift in investor sentiment.

Timmer, who has long explored the interplay between traditional assets and digital currencies, pointed out that the 52-week Sharpe ratios for both assets are now converging. Gold, which has posted 67 record closes since early 2024 and is up around 33% this year, has seen its edge in performance and volatility erode as Bitcoin recovers from its spring lows. The cryptocurrency has bounced nearly 25% since dipping below $76,000 in April.

At current prices — with gold hovering around $3,213 per ounce and Bitcoin near $103,600 — Timmer’s preferred portfolio balance of 4:1 in favor of gold appears to produce similar volatility and cumulative returns. This heuristic supports the idea that gold and Bitcoin are not rivals, but potential partners in a diversified store-of-value strategy.

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Rather than replacing gold, Bitcoin may now be reclaiming its role as a speculative complement — particularly as gold’s pace cools and Bitcoin’s Sharpe improves. That convergence could prompt investors to start rotating some capital back into crypto.

Still, caution remains warranted. Bitcoin’s Sharpe ratio is still in negative territory, and external risks like regulatory crackdowns or liquidity stress could reopen the divergence. But for now, the data suggests the digital gold narrative may be regaining strength.

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