Bitcoin vs Gold: a comparison of asset prices in 2020
What differences were there in 2020 between the price performance of gold and the price performance of bitcoin?
First let’s say right away that the average volatility of gold historically has nothing to do with the sometimes exaggerated volatility of bitcoin.
For example, by Bitcoin Circuit analysing the last five years of the gold price trend in US dollars we find that there has been an overall increase in value of 77%, while for bitcoin it is an incredible +6,388%.
Therefore, a direct comparison between the growth percentages would not be particularly fair. Gold is valued for its stability, bitcoin for its volatility.
However, we can for example compare the relative performance of 2020 with that of previous years.
During 2020, gold appreciated by 24%. This is a significant performance for the precious metal, especially when compared to previous years.
Actually, in 2019 the appreciation was essentially the same, but the previous year the price fell by 4%. In 2017, on the other hand, the increase was 13%, and in 2016 it was 8%.
Therefore, the sequence of the last five years in terms of the annual gold price trend has been this: +8%, +13%, -4%, +24%, +24%.
This is a relatively regular trend, with the exclusion of 2018.
For bitcoin, on the other hand, things are very different.
This year the increase has been remarkable, amounting to 288%. That is, in a single year it has increased in value almost four times more than gold has done in the last five years.
Last year it was 78%, but in 2018 it recorded a loss of 75%. In fact, by the end of 2017 the last major speculative bubble had formed and burst as of 18 December of that year.
However, during 2017 the increase was an impressive 1,500%, while the previous year it was 131%.
Therefore, the sequence of the last five years regarding the annual performance of bitcoin’s price has been this: +131%, +1,500%, -75%, +78%, +288%.
When comparing this sequence with that of gold, it is clear that both are characterised by a single year of losses, 2018. But in fact this is the only similarity.
What stands out most are bitcoin’s incredible performance in 2020, and especially in 2017, compared to the average of the other years.
In particular, while gold grew as much in 2020 as it did in 2019, bitcoin did enormously better.
Sure, BTC in 2020 recovered its 2018 losses, returning to the levels of late 2017, but given the remarkable growth it had in 2017, the 2020 performance can by no means be dismissed simply as a recovery of losses.
For gold, on the other hand, the path is quite different, although the alternation of plus and minus signs has been the same.
After all, 2020 and 2019 were simply a little better than 2017, and the losses in 2018 were very limited.
In other words, gold’s price 2020 was definitely good, but within the norm, while bitcoin’s was excellent, albeit not the best year ever.