Bitwise Chief Investment Officer: Bitcoin and gold have completely different impacts on portfolios, reflected in the risk and return trade-off

Matt Hougan, chief investment officer of Bitwise, said in a post on X: "Historically, Bitcoin and gold have had very different effects on portfolios. In the long run, one has increased returns without increasing risk, while the other has reduced risk without reducing returns. Please note that this is not an investment recommendation, but only a historical study. Past performance does not guarantee future returns. The best way to understand the impact of Bitcoin and gold on a portfolio is to look at what has happened historically when you add more and more of these two assets to the portfolio. Historically, as you add more and more Bitcoin, the total return of the portfolio rises sharply. At the same time, the standard deviation data, which measures volatility, has hardly changed. According to the simulation, a 2.5% Bitcoin allocation would increase the portfolio's return from 98% to 148%, an increase of 50 percentage points, while the standard deviation would only increase by 33 basis points. Over the entire 10 years of the study, a 2.5% gold allocation would only increase the portfolio's return by 1%, with little impact on returns. However, where gold does have an impact is in terms of volatility (standard deviation figure), which decreases as more and more gold is added. Each asset has its own trade-offs. There is no guarantee that these same features will continue in the future. But as we enter a new era of global government stimulus, it is important to remember that the two assets are different and they do not play the same role in a portfolio. ”