Studying market crashes since 2018, Bitwise finds gold limits losses while bitcoin drives rebounds.
Bitcoin and gold are often pitted against each other as competing hedges against inflation and currency debasement. However, the data suggests that the strongest portfolios hold both.
In fact, experts from Bitwise found that gold consistently cushions downside during market drawdowns, while BTC tends to outperform sharply during recoveries.
Gold-and-Bitcoin Portfolio
A new report by Bitwise Senior Investment Strategist Juan Leon and Quantitative Research Analyst Mallika Kolar stated that investors seeking protection from dollar debasement and market volatility may benefit most from holding both gold and Bitcoin rather than choosing between the two.
The analysis was prompted by recent comments from Bridgewater Associates founder Ray Dalio, who recommended a combined 15% allocation to gold and BTC amid rising US federal debt and persistent deficit spending, which he said increases the risk of long-term currency debasement.
To test the claim, Bitwise analyzed major market downturns over the past decade and compared a standard 60/40 portfolio with versions that included gold, BTC, or both.
The findings showed that gold consistently acted as a defensive asset during periods of market stress, while bitcoin tended to outperform sharply during subsequent recoveries. During the 2018 equity drawdown, when stocks fell 19.34%, and BTC declined more than 40%, gold gained 5.76%.
In 2020, equities dropped nearly 34% during the COVID-19 shock, BTC fell 38.1%, and gold declined just 3.63%. A similar pattern emerged in 2022, when equities fell 24.18% and BTC nearly 60% amid inflation, aggressive rate hikes, and crypto-specific turmoil, while gold dropped less than 9%.
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Sharpe Ratios
In the 2025 market pullback tied to escalating trade tensions, equities fell 16.66%, bitcoin declined 24.39%, and gold rose nearly 6%. In the recoveries that followed, the crypto asset repeatedly delivered outsized gains, including a nearly 79% rally after the 2018 bottom, a 775% surge following the 2020 pandemic lows, and a 40% rise in 2023 as inflation eased and expectations grew for a shift in monetary policy.
Gold also posted solid gains during recoveries. However, these were typically less dramatic, while equities rebounded strongly. The report evaluated performance across full periods rather than individual phases. On that basis, portfolios that included both gold and Bitcoin showed a superior balance of risk and return, with a Sharpe ratio of 0.679. This is nearly three times higher than the traditional 60/40 portfolio and well above a portfolio that added gold alone.
While a BTC-only allocation produced a higher Sharpe ratio, it also came with significantly higher volatility.
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