Portfolios that combine Bitcoin and gold have been found to offer a stronger risk-return profile than traditional asset allocations. A Bitwise research shared with investors on Tuesday revealed that a hybrid approach significantly improved performance over the last decade. The study proposes an alternative framework for investors looking to hedge against the devaluation of the dollar while also numerically testing a suggestion by Ray Dalio, a leading figure in the hedge fund world. The analysis emphasizes the importance of diversifying investment portfolios with complementary instruments instead of relying on a single asset.
Why Is Bitcoin and Gold Together More Powerful?
Bitwise’s research demonstrates that a portfolio containing 15% Bitcoin and gold provides much higher risk-adjusted returns when compared to the conventional 60% equity and 40% bond allocation. The mixed portfolio achieved a Sharpe ratio of 0.679 over the same period, while the traditional 60/40 portfolio remained at 0.237. A portfolio containing only gold and no Bitcoin positioned itself at an intermediate point with a Sharpe ratio of 0.436.
The team behind the research includes Matt Hougan, CIO of Bitwise, Senior Investment Strategist Juan Leon, and quantitative analysis lead Mallika Kolar. Using Bloomberg resources, they scrutinized four major market downturns in 2018, 2020, 2022, and 2025. The findings reveal that gold acts as a buffer in downturns, while Bitcoin, despite experiencing sharper pullbacks, emerges prominently during recovery phases.
Dalio’s 15% Allocation Thesis
The study stress-tested Ray Dalio’s advocacy for a 15% allocation to Bitcoin or gold, based on his belief that rising federal debt and budget deficits could erode the dollar. In 2018, while stocks fell by 19.34%, gold rose by 5.76%, playing a balancing role during the 2020 pandemic shock, with limited losses. During the same periods, Bitcoin experienced sharper falls but made robust rebounds in subsequent years.
The recovery phases illustrated why the hybrid approach effectively combines defense and offense. After 2018, Bitcoin rose by about 79%, and in the period following 2020, it surged over 774%, significantly strengthening the portfolios’ return aspect. Although the recovery process for the pullback in 2025 is not yet complete, Bitwise data reveals that gold and stocks gained momentum rapidly, with Bitcoin’s performance to be tracked until April 2026. The research team suggests that rather than choosing “gold or Bitcoin,” both assets should be considered together.
