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Bitcoin Is Not the New Gold

Author

Listed:
  • Alexander Kriwoluzky
  • Christoph Schneider

Abstract

The price of cryptocurrency Bitcoin has risen sharply over the past ten years, with many investors adding Bitcoin to their portfolios, benefitting from price increases and diversifying their investments. But is Bitcoin suitable for this purpose? This Weekly Report examines the extent to which Bitcoin, like gold, can contribute to the diversification of an investment portfolio. To achieve this, we have calculated the correlation of monthly returns over the last ten years between U.S. and German stocks, bonds, gold, and Bitcoin. The results of our calculations indicate that, unlike gold, Bitcoin has shown a high correlation with stock market returns over time. As a result, an investment portfolio heavily weighted towards stocks cannot achieve the same level of diversification with Bitcoin as it could with gold.

Suggested Citation

  • Alexander Kriwoluzky & Christoph Schneider, 2025. "Bitcoin Is Not the New Gold," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 15(9), pages 55-60.
    • Handle: RePEc:diw:diwdwr:dwr15-9-1
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.938867.de/dwr-25-09-1.pdf
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    More about this item

    Keywords

    Bitcoin; portfolio diversification; financial markets; correlation analysis;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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