Bitcoin and Gold: The Ultimate Portfolio Combo
In a groundbreaking analysis, Bitwise Chief Investment Officer Matt Hougan revealed research showing that portfolios combining bitcoin and gold deliver superior risk-adjusted returns compared to traditional allocations.
The Numbers Don't Lie
Bitwise's research team found that a 15% combined allocation to bitcoin and gold produced a Sharpe ratio nearly three times higher than a standard 60/40 portfolio over the past decade. According to their calculations:
- Bitcoin+Gold portfolio: Sharpe ratio of 0.679
- Traditional 60/40 portfolio: Sharpe ratio of 0.237
- Gold-only portfolio: Sharpe ratio of 0.436
Stress-Testing Ray Dalio's Recommendation
This research directly tests the recent recommendation from Bridgewater Associates founder Ray Dalio, who suggested a 15% combined allocation to gold or bitcoin as a hedge against dollar debasement from federal debt and deficit spending.
Defense in Drawdowns, Offense in Recoveries
Bitwise analyzed four major market drawdowns using Bloomberg data:
2018 Drawdown
- Equities: -19.34%
- Bitcoin: -40.29%
- Gold: +5.76%
2020 COVID-19 Drawdown
- Equities: -33.79%
- Bitcoin: -38.10%
- Gold: -3.63%
2022 Drawdown
- Equities: -24.18%
- Bitcoin: -59.87%
- Gold: -8.95%
2025 Drawdown
- Equities: -16.66%
- Bitcoin: -24.39%
- Gold: +5.97%
The Recovery Power
Where bitcoin truly shines is in recovery phases:
Post-2018 Recovery
- Bitcoin: +78.99%
- Gold: +18.14%
Post-2020 Recovery
- Bitcoin: +774.94%
- Gold: +111.92%
- Equities: +77.80%
Post-2022 Recovery
- Bitcoin: +40.16%
- Gold: +17.53%
- Equities: +22.82%
Current Recovery Data
For the ongoing recovery from the 2025 drawdown (as of analysis):
- Equities: +38.65%
- Gold: +44.79%
- Bitcoin: +14.04%
Note: The full one-year post-drawdown period doesn't conclude until April 2026.
The Bottom Line
Bitwise Senior Investment Strategist Juan Leon and Quantitative Research Analyst Mallika Kolar concluded: "Often, the question of gold vs. bitcoin is framed as either/or. As the data shows, historically the best answer is 'both.'"
The research demonstrates that while gold provides defensive cushioning during market downturns, bitcoin delivers explosive offensive power during recoveries, creating a powerful combination for portfolio construction.
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