Bitcoin and Gold – Stronger Together!

Early interest

We became interested in Bitcoin and cryptocurrencies early on and analysed Bitcoin and cryptocurrencies for the first time in the 2015 In Gold We Trust Report. Early on, we realised what a big role cryptocurrency could play in a decentralised monetary system, and that the characteristics of Bitcoin are very similar to those of gold.

An idea emerges

One thing soon became clear, the similarities between gold and cryptocurrencies could be exploited by combining them. Especially in turbulent inflationary times like these, the demand for non-inflationary assets is rising steadily. Our strategy for combining bitcoin and gold is based on the fact that while both have similar characteristics, they do not behave very similarly. The price of the two does not correlate very strongly with each other. In addition, the volatility is extremely different. It is therefore possible to balance Bitcoin’s large fluctuations with golds stability. On the other hand, Bitcoin’s large volatility can be exploited by writing options.

The fruits of our labour

Since the start of the Incrementum Digital & Physical Gold Fund, one thing has become clear. The strategy we have chosen works. By combining the two, we are able to take advantage of Bitcoin’s high volatility, but also greatly reduce the sharp fluctuations and the associated risk. We achieve this by regularly rebalancing the allocation to bitcoin and gold. We are therefore confident that our strategy will continue to work and are excited about the combinations and opportunities that can be achieved with this strategy in general in the future.