Gold Beats Bitcoin by 22% in 2022, Says Arcane Research

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  • A new report from Arcane Research suggests that gold is serving as a better hedge against inflation than Bitcoin through the first four months of the year.
  • Arcane shows that gold is up 4% while Bitcoin is down 18% from the start of the year.
  • In recent months, Bitcoin and cryptos in general have been more closely correlated with high-tech stocks which are down 19% in 2020.

Arcane Research reports gold is up 4% while Bitcoin is down 18%, making gold a better inflation hedge so far this year.

The most recent data from the U.S. Bureau of Labor Statistics showed that the consumer price index -- also known as "inflation" -- reached 8.5% compared to the prior year. This marks the 10th consecutive month inflation has been higher than 5%, hitting the highest levels since 1981.

Inflation is an economic poison that not only increases the cost we pay for the goods we all need, it erodes the value of currencies, reducing their respective store of value. For the past 10 years, Bitcoin has been the penultimate store of value against inflation, producing annualized returns of more than 230% and beating the returns from the tech-heavy NASDAQ by 10 times.

However, new research shows that the most valuable crypto by market cap and incomparable investment asset of cryptocurrency exchanges everywhere is losing some of its inflation-busting luster to stodgy old gold.

Report finds Bitcoin is lagging behind gold

The latest subscription report from Arcane Research finds that gold is up 4% on the year, while Bitcoin is down 18%. In its analysis, Arcane acknowledges that since 2020, Bitcoin has been highly correlated to the price of gold, but that trend is changing.

Due to its strong triple-digit returns over the past decade, Bitcoin was seen as a solid inflation hedge, and has been frequently dubbed "digital gold" due to its similar traits to the precious metal such as scarcity, durability, widespread acceptance, and ability to divide down into smaller units of value.

However, Arcane notes that the 22% difference in return and pricing patterns of Bitcoin this year track much more closely to the technology sector than gold. In fact, the NASDAQ is off 19% on the year -- trailing Bitcoin by only a single percentage point. Crypto -- and Bitcoin specifically -- are now much more correlated to "Big Tech."

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Bitcoin falls below $40,000 per coin

At the time of writing, Bitcoin was up 1.66%, trading at $39,372 per coin according to CoinMarketCap, despite news earlier this week that Fidelity Investments will soon be adding Bitcoin as an investment option to 401(k) savers. This was big news but has had little impact on the short-term price. It's possible the news could still lift Bitcoin once Fidelity sets a firm start date.

Regardless, it's important to remember that this is not financial advice and every investor should always do their own research, investing only what they can afford to lose. However, don't count Bitcoin out this year as its underlying fundamentals are stronger than ever. We have more than eight months to go in 2022 and that's plenty of time for Bitcoin to match last year's 60% return on investment.

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