Bloomberg’s Bold Move: Combining Bitcoin and Gold in a Single Index Disrupts Finance

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Muntasir Aumio
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Bloomberg’s Bold Move: Combining Bitcoin and Gold in a Single Index Disrupts Finance

Bloomberg has recently unveiled a range of asset indices aimed at assisting investors in diversifying their traditional investment portfolios, marking a groundbreaking initiative that integrates bitcoin and commodities.

Bloomberg, a renowned global financial media, data, and technology firm, introduced its Bitcoin & Gold Blend Indices, which consist of the Bloomberg Bitcoin and Gold Equal-Weighted Index and the Bloomberg Dollar, Bitcoin and Gold Equal-Weighted Index. These indices are designed to aid both institutional and retail investors in broadening their investment portfolios.

A Significant Year

In an official announcement, Bloomberg revealed that 2024 represented a pivotal year for cryptocurrencies, attributing the surge to favorable regulations and sentiment that attracted over $220 billion in crypto investments.

“These investments were spread across more than 250 ETFs, including those connected to spot Bitcoin and spot Ethereum, which provided broader access to crypto markets within a familiar framework,” Bloomberg emphasized.

According to the financial giant, gold and Bitcoin hit their all-time highs last year, reinforcing their belief in the “relationship between digital and physical assets.”

This has prompted many investors to delve into their competitive and complementary features within diversified portfolios.

Integrating Bitcoin And Gold

Bloomberg clarified that the Bitcoin & Gold Blend Indices are the inaugural entries in this series, indicating they were created with a unit-based framework to facilitate future modifications and “customization of building blocks and weight based on client interest.”

BTCUSD trading at $97,581 on the daily chart: TradingView.com

The objective of these new indices is to harness Bitcoin’s growth potential while pairing it with gold’s historic stability.

“We anticipate that the Bloomberg Bitcoin and Gold basket will be the pioneer among many commodity and digital asset mixtures as we observe a growing interest from investors for tailored indices targeting specific investment goals and return profiles,” stated Jigna Gibb, Head of Commodities & Crypto Index Products at Bloomberg Index Services Limited.

Bloomberg mentions that the Bloomberg Dollar, Bitcoin and Gold Equal-Weighted Index combines the defensive features of the US dollar with the “potential long-term uncorrelated characteristics” of Bitcoin and gold.

Historically, Bitcoin and gold have demonstrated nearly zero correlation, both consistently delivering positive long-term returns, making their combined index a valuable diversification tool for traditional multi-asset portfolios.

“With Bloomberg Indices’ capabilities, we can continuously adapt index offerings as the industry progresses. Given Bitcoin’s considerable price volatility, we believe there is a compelling rationale for the combined use of Bitcoin and Gold, rather than viewing them as competing assets,” Gibb remarked.

Bitcoin Tracks Gold

On the other hand, a crypto analyst contests the notion that Bitcoin and gold exhibit zero correlation.

Daink stated that Bitcoin tends to follow gold’s trends after distinct periods where they diverge or trend in opposite directions.

“Every time gold diverges from BTC, BTC ends up catching up, as shown in the black circles,” Daink clarified on the X platform.

Over the majority of Bitcoin’s existence, the correlation between Bitcoin and gold has varied. Initially, the pricing of both assets fluctuated independently of one another, implying that a rise in one asset’s price did not automatically lead to an increase in the other.

While there isn’t a direct relationship between Bitcoin and gold, Bitcoin tends to align with the movements of gold after a certain time has elapsed.

Featured image from Gemini Imagen, chart from TradingView

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