When the storm comes, gold is the shield, and Bitcoin is the spear

The continuous erosion of the US dollar’s purchasing power has led many investors to face a classic dilemma: choose gold or embrace $BTC? The answer provided by historical data may be surprising: holding both might be the better solution.

A highly reputable hedge fund founder in the macro investment field recently publicly suggested that investors consider allocating 15% of their portfolios to gold and $BTC. The core logic is that the ever-expanding federal debt and ongoing fiscal deficits indicate that the pressure for dollar depreciation will persist long-term. In this environment, holding assets that can hedge against purchasing power loss becomes crucial.

This viewpoint prompted us to conduct a stress test. We looked back at major market downturns over the past decade and compared the performance of a traditional 60/40 stock-bond portfolio with those that added 15% of $BTC, gold, or both. The conclusion is clear: in all scenarios, the combination of gold and $BTC outperformed holding either one alone. They form the strongest complement to traditional portfolios.

Gold acts as a “buffer.” Looking back at several market crashes in 2018, 2020, 2022, and 2025, gold provided effective downside protection.

In 2018, influenced by trade tensions and monetary policy, the stock market fell 19.34%, $BTC plummeted 40.29%, while gold rose 5.76% against the trend. In the pandemic shock of 2020, stocks declined 33.79%, $BTC dropped 38.10%, and gold only slightly fell 3.63%.

In 2022, amid high inflation and aggressive rate hikes, stocks fell 24.18%, $BTC crashed 59.87% due to exchange failures and other special events, and gold declined 8.95%, remaining relatively stable. In 2025, during tariff panic, stocks dropped 16.66%, $BTC fell 24.39%, and gold rose again 5.97%.

So, does this mean one should only hold gold and abandon $BTC? The answer lies in the data from market recoveries.

When the market bottoms out and rebounds, $BTC becomes a “spring.” Within a year after the 2018 bottom, stocks rebounded 39.89%, gold rose 18.14%, and $BTC surged 78.99%. After the large stimulus measures in 2020, stocks rebounded 77.80%, gold soared 111.92%, and $BTC’s rebound reached an astonishing 774.94%.

In 2023, as inflation expectations eased, stocks increased 22.82%, gold rose 17.53%, and $BTC gained 40.16%. Since the recovery from the 2025 tariff panic, stocks have risen 38.65%, gold jumped 44.79%, and $BTC is currently up 14.04%, with the full recovery cycle still ongoing.

The key insight is: history shows you need gold to hedge against market downturns and $BTC to capture rebounds.

Of course, no one can precisely predict market turning points. A more pragmatic strategy is to examine performance over complete cycles. Data indicates that a portfolio including both gold and $BTC strikes the best balance between buffering declines and enhancing rebound returns.

From a risk-adjusted return perspective, a portfolio containing both gold and $BTC has a Sharpe ratio of 0.679, nearly three times that of the traditional 60/40 portfolio (0.237) and higher than a gold-only portfolio (0.436). A portfolio with only $BTC has the highest Sharpe ratio (0.875), but its volatility is also significantly greater.

Therefore, holding both assets throughout the entire market cycle allows the portfolio to benefit from gold’s defensive qualities and share in $BTC’s offensive potential. The debate over gold versus $BTC is often simplified to a binary choice, but the historical best answer provided by data is: “Both.”

Follow me: Get more real-time analysis and insights on the crypto market!