Bitcoin, digital gold or tech stock?

One of the controversial issues in the cryptosphere is whether Bitcoin really is digital gold, as some claim, and therefore tracks the price of physical gold, or, on the contrary, whether it is a speculative investment that behaves more like tech stocks, as another school of thought maintains.

To try to shed some light on this, we compared the price performance of the queen of crypto with that of gold and of the so-called Magnificent Seven (MAGS), the stocks of the main US tech companies: Apple, Amazon, Alphabet (Google), Meta (Facebook), Microsoft, Nvidia and Tesla.

The comparison was made in US dollars (USD), so as not to muddy the analysis with the effects of the USD/Euro exchange rate.

For simplicity, we compared the data at a few specific points in time starting from one year ago, May 2024, as shown in the table below.

Which can be represented graphically as follows

The answer, as often happens, is not clear-cut. If you look at the trend over the last 12 months, the price of Bitcoin does seem to move in step with tech stocks at every data point. On the other hand, if we look only at the overall change compared with twelve months ago, or even just six months ago, we see that the gains were quite different across the three benchmarks. Over one year, Bitcoin and physical gold posted very different gains, several dozen percentage points higher than tech stocks.

The question is not an academic one: it has practical implications and can guide investment choices, especially at a time of market turmoil like the one we are currently going through.