Bitwise’s recent study reveals that gold acts as a protective buffer during market downturns in traditional 60/40 portfolios, while Bitcoin drives significant gains during recovery phases. Allocating just 15% split between these two assets can elevate the Sharpe ratio to 0.679, compared to only 0.23 for the classic stock-bond mix.
Gold has historically shown resilience by either gaining or experiencing minimal losses amid major market sell-offs, appreciating approximately 6% during pullbacks in both 2018 and 2025 when stocks and Bitcoin sharply declined.
In contrast, Bitcoin demonstrated remarkable upside potential post-crisis, surging about 79% after the lows of 2018 and an extraordinary roughly 775% following the bottom of the pandemic-induced crash in 2020—far outperforming gold and equities throughout these rebounds.
The asset management firm Bitwise analyzed key market corrections over the last decade to compare traditional portfolios with those incorporating gold, Bitcoin, or a combination of both. This research was partly inspired by investor Ray Dalio’s suggestion to allocate around fifteen percent collectively into gold and Bitcoin amid growing U.S. debt concerns.
The report highlights that during periods of financial stress such as the equity downturn in late-2018—when stocks dropped nearly twenty percent and Bitcoin fell over forty percent—gold rose by almost six percent. Similarly, amidst COVID-19’s market shock in early-2020 where equities plunged nearly thirty-four percent and Bitcoin lost more than thirty-eight percent value, gold’s decline was limited to under four percent.
This defensive trend persisted through other challenging episodes like inflation-driven sell-offs in 2022; while equities fell over twenty-four percent and Bitcoin dropped close to sixty percent due to rising interest rates fears, gold’s loss remained below nine percent. During trade tension-related declines around mid-2025 with stocks down sixteen point six six percent and bitcoin falling twenty-four point three nine per cent; notably gold gained nearly six per cent.
Conversely during recovery stages examined by Bitwise data sets: bitcoin achieved impressive rallies — up seventy-nine per cent after its nadir post-2018 correction; soaring seven hundred seventy-five per cent from pandemic lows; plus a further forty per cent rise as inflation pressures eased through early-to-mid-2023 periods — whereas gains from gold were positive but more subdued relative to cryptocurrencies or equity rebounds.
When assessing full cycle performance rather than isolated intervals alone: portfolios blending both assets outperformed standard models substantially on risk-adjusted returns metrics (Sharpe ratio near zero point six seven nine), which is almost triple what conventional sixty-forty allocations achieve—and better than strategies adding only precious metals alone according to Bitwise findings—even though pure bitcoin allocations showed higher Sharpe ratios they came at cost of elevated volatility risks.
The analysis concludes that instead of competing against each other within investment mixes; combining bitcoin alongside traditional safe haven asset classes like gold may provide complementary benefits — offering downside protection via stable precious metals balanced against growth opportunities presented by digital currencies once markets rebound strongly again moving forward under varying economic conditions globally going ahead according their research insights provided herein today!