Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/313726 
Year of Publication: 
2025
Citation: 
[Journal:] DIW Weekly Report [ISSN:] 2568-7697 [Volume:] 15 [Issue:] 9 [Year:] 2025 [Pages:] 55-60
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
The price of cryptocurrency Bitcoin has risen sharply over the past ten years, with many investors adding Bitcoin to their portfolios, benefitting from price increases and diversifying their investments. But is Bitcoin suitable for this purpose? This Weekly Report examines the extent to which Bitcoin, like gold, can contribute to the diversification of an investment portfolio. To achieve this, we have calculated the correlation of monthly returns over the last ten years between U.S. and German stocks, bonds, gold, and Bitcoin. The results of our calculations indicate that, unlike gold, Bitcoin has shown a high correlation with stock market returns over time. As a result, an investment portfolio heavily weighted towards stocks cannot achieve the same level of diversification with Bitcoin as it could with gold.
Subjects: 
Bitcoin
portfolio diversification
financial markets
correlation analysis
JEL: 
E44
G11
G12
Persistent Identifier of the first edition: 
Document Type: 
Article

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