Can Bitcoin Glitter More Than Gold for Investment Styles?. (May 2020)

• Record Type: Journal Article
• Authors: Naeem, Muhammad Abubakr; Hasan, Mudassar; Arif, Muhammad; Shahzad, Syed Jawad Hussain
• Is Part Of: SAGE Open. Volume 10:Number 2(2020:Apr./Jun.)
• Publication Date: 2020-05
• Subjects: gold -- Bitcoin -- investment styles -- safe-haven -- hedge; Social sciences -- Periodicals; 300.5
• DOI: 10.1177/2158244020926508
• Languages: English
• ISSNs: 2158-2440

Abstract

We compare the hedging, safe-haven, and diversification potential of gold and Bitcoin for different investment styles and industry portfolios in the United States. We find that gold is at least a weak hedge for the style and industry portfolios except for utilities, energy, and telecom. The hedging potential of gold is comparatively higher for large-cap portfolios, whereas Bitcoin offers minimal hedging effectiveness. However, Bitcoin shows hedging potential for the noncyclical industries. Although investors need a higher amount of investment to hedge the downside risk using gold, it still is a superior hedging instrument compared with Bitcoin. Finally, the analysis using the conditional diversification approach shows that gold is a superior and stable diversifier for style and industry portfolios. Overall, our findings provide evidence of superior safe-haven and hedging potential of gold over Bitcoin.