Bitcoin greatly outperforms the gold ETF on tight terms per year


  • Bitcoin has outperformed its traditional rival Gold in an adjusted period of time per year.
  • The spot price of the cryptocurrency has increased by more than 50% in a year, a series of geopolitical and macroeconomic factors helping its recovery.
  • Over the same time period, the SPDR Gold Trust ETF increased by more than 32%.

Bitcoin didn't get its exchange traded fund, but it surely managed to beat one.

Benchmark cryptocurrency far outperformed the SPDR Gold Trust ETF (NYSEArca: GLD) within tight deadlines per year. Its spot rate increased by just over 51% compared to May 13, 2019, exceeding the 32% yield of the SPDR during the same period. This has helped streamline Bitcoin as a more profitable asset than the derivatives that follow the yellow metal.

Upward movements in both markets have occurred periodically due to similar macroeconomic and geopolitical scenarios. The U.S.-Iran conflict in early 2020 helped Bitcoin, as well as the gold and gold ETFs, stand up hand in hand as convincing covers.

Their correlation also tightened against the depreciation of the Chinese yuan at the height of the US-China trade war in 2019. As investors hedged their risks in gold, the demand for bitcoin has more expanded as a tool to bypass China's tight Leash on outgoing capital.

Coronavirus

The appearance of the coronavirus pandemic outside of China ultimately caused a collapse of the global market, causing all risky assets to one side of the spectrum. As usual, Bitcoin and gold fell in sync with global stocks in March 2020, as investors' perception of safe haven turned to cash.

The US Federal Reserve then introduced an emergency package to protect the economy. This followed the Trump administration’s decision to introduce a $ 3 trillion stimulus package. As liquidity began to return to the economy, Bitcoin and SPDR saw notable recoveries.

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Source: Dan Tapiero

Even then, Bitcoin was able to return a better short-term gain than the gold ETF. The cryptocurrency has recovered more than 175%. In comparison, SPDR has recovered to just over 20% from its lows of mid-March.

Riskier Bitcoin

The gains in Bitcoin impressed, but its high risk-return ratio also prevented large investors from placing large capital in its market. During the March sale, the cryptocurrency fell more than 50% in just 24 hours.

While the broader market outlook viewed Coronavirus as the primary catalyst, bitcoin partially fell due to BitMEX, a cryptocurrency exchange, which settled long positions worth $ 700 million in only 15 minutes. Bitcoin's implied volatility, which measures cryptocurrency risks in the future, hit its highest level since January 9.

In comparison, the drop in SPDR was just over 15%, a shocking shock but not as bad as Bitcoin.

Photo of Jonathan Chng in Unsplash



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