Fidelity Forecast: Bitcoin Could Soon Surpass Gold's Dominance

BlockBeats News, May 4th, Fidelity hinted that Bitcoin may soon take over the baton from gold, with Fidelity's Global Macro Director of Investments Jurrien Timmer recently publishing a detailed analysis of the dynamic relationship between Bitcoin and gold. He cited data from Fidelity Management & Research Company (FMR Co) and Bloomberg, analyzed the trend of the Sharpe ratio of the two assets (an indicator of risk-adjusted return), and pointed out that their relative performance may be at a turning point.

"Ironically, there is a negative correlation between gold and Bitcoin. As can be seen from the chart below, the Sharpe ratios of these two assets have recently alternated in leadership," he commented, adding, "It seems that the next moment of leadership may be Bitcoin's, as its Sharpe ratio is currently -0.40, while gold is at 1.33. Therefore, we may witness the baton handover from gold to Bitcoin."

The chart he shared shows that the recent return of gold is $22.51, while Bitcoin's is $13.22, with gold's return amplified by 4 times to reflect its lower volatility, and Bitcoin's return not proportionally adjusted, remaining at 1x.

Timmer also commented on the psychological and behavioral aspects of investing in Bitcoin. He described Bitcoin's volatility and unpredictability as its fundamental characteristics: "Bitcoin is slightly different from gold because it has a 'Dr. Jekyll and Mr. Hyde' dual personality." In Timmer's view, Bitcoin performs best when the money supply (M2) and the stock market expand simultaneously, benefiting from its dual attractiveness as a speculative asset and a store of value. In contrast, he commented that gold has "only one attribute," providing more stability. Timmer acknowledged the legitimacy of Bitcoin in today's monetary landscape, calling it "a modern invention that aspires to be hard money in the era of loose monetary policy."