Can Bitcoin Glitter More Than Gold for Investment Styles?

Muhammad Abubakr Naeem, Mudassar Hasan, Muhammad Arif and Syed Jawad Hussain Shahzad

SAGE Open, 2020, vol. 10, issue 2, 2158244020926508

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.

Keywords: gold; Bitcoin; investment styles; safe-haven; hedge (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:10:y:2020:i:2:p:2158244020926508

DOI: 10.1177/2158244020926508

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