Key takeaways:
Bitcoin’s Sharpe ratio converges with gold’s, indicating similar risk-adjusted returns, supporting its store-of-value role.
Gold outperformed Bitcoin in Q1 2025 with a 30.33% price gain versus Bitcoin’s 3.84%, driven by economic uncertainty.
Bitcoin ETF inflows are recovering, and analysts predict BTC could reach $110,000–$444,000 in 2025.
Bitcoin’s (BTC) price is holding above $100,000, leading Fidelity Director of Global Macro, Jurrien Timmer to say the crypto asset could reclaim its position as a leading store-of-value contender.
Timmer’s recent analysis highlights a convergence in the Sharpe ratios of Bitcoin and gold, suggesting that the two assets are increasingly comparable in risk-adjusted returns. The Sharpe ratio measures the rate of return an investment provides for the risk taken, by comparing its performance to a risk-free benchmark relative to its volatility.
The chart below, tracking weekly data between 2018 and May 2025, shows Bitcoin’s returns (1x) catching up to gold’s (4x), with gold at $22.48 and Bitcoin at $15.95 in relative performance terms.
Gold vs Bitcoin Sharpe ratio. Source: X.com
From an allocation standpoint, Timmer recommended a 4:1 gold-to-Bitcoin ratio for a store-of-value hedge, highlighting an intriguing observation. Timmer said,
“I continue to be fascinated by the fact that the most negatively correlated asset to Bitcoin is gold. For two players on the same store-of-value team, it’s not what I would expect to see. Bitcoin’s risk-reward ratio has continued to impress. There is no other asset quite like it!”
While Bitcoin’s SoV credential improves above $100,000, Ecoinometrics, a Bitcoin-focused macroeconomic newsletter, pointed out that it was not smooth sailing in Q1 2025.
In 2024, Bitcoin spot exchange-traded traded-funds (ETFs) saw a staggering $35 billion net inflows, purchasing 500,000 BTC and driving a 120% return. However, 2025 started on a different note. The first four months saw Bitcoin ETF flows drop to less than a third compared to 2024, while gold ETFs attracted more capital.
The newsletter noted that this shift could be attributed to Q1 uncertainty surrounding Federal Reserve policy, trade policy, and the US economy. Ecoinometrics stated,
“Between two hard assets, gold and Bitcoin, it’s easy to see why capital went to the one seen as a haven.” Bitcoin vs gold ETF netflows comparison. Source: X.com
Gold, with a 30.33% price gain in 2025 compared to Bitcoin’s 3.84%, benefited from its stability during economic unease. Additionally, the analysis added that Bitcoin performed better as a “high-beta growth asset,” thriving in rising liquidity and fiat debasement environments.
Recent developments signal a shift: US trade policy clarity, a softer Federal Reserve stance, and easing financial conditions have spurred steady inflows into Bitcoin ETFs.
Related: Bitcoin bull flag and standard profit taking hint at eventual rally to new BTC price highs
Bitcoin is on track for new highs in 2025
A higher Sharpe ratio is a positive metric for Bitcoin, significantly increasing the probability of reaching new all-time highs above $110,000 in May. According to Bitcoin Suisse, a crypto custody firm, BTC’s high Sharpe ratio has allowed the asset to thrive in risk-on and risk-off environments since the US presidential election.
Bitcoin price performance in risk-on, risk-off. Source: Bitcoin Suisse
With more than 88% of its supply in profit, BTC currently behaves as a high-conviction bet, where the likelihood of an “acceleration phase” moving forward. Bitcoin Suisse head of research Dominic Weibei said,
“In this environment, Bitcoin has emerged as the Swiss army knife asset. Whether equities rally or bonds crumble, BTC trades on its supply-demand fundamentals, delivering a win-win profile that traditional assets simply can’t offer.”
Similarly, Cointelegraph reported that Bitcoin has a “decent chance” of reaching $250,000 or more in 2025, driven by its interplay with gold, according to a gold-based forecast. The report uses a scenario-based framework rooted in its gold model to project Bitcoin’s potential revaluation as a non-sovereign hard asset.
If Bitcoin’s network value, measured in gold, follows a power curve, and gold maintains its current value, analysts suggest it could hit $444,000 in 2025. However, a more conservative estimate by Bitcoin analyst Apsk32 points to a “reasonable” target of $220,000 for the year.
Related: Altcoins are on the verge of ‘most powerful rally’ since 2017 — Analyst
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
