One of the most debated topics surrounding Bitcoin is its quality as a store of value. Digital store of value that contrasts with the physical one of the yellow metal, i.e. gold.
This challenge promises to be eternal at least as long as Bitcoin and the crypto ecosystem continue to exert such a strong fascination on investors who are now able to own fractions of cryptocurrencies also through regulated instruments such as ETFs, at least in America. Consequently, the challenge between the gold commodity and the digital commodity Bitcoin is open.
But there is another interesting challenge where it is not two “commodities” that are competing but real companies with balance sheets, revenues, costs, management and much more. Even in this case the ETF market today allows you to passively own fractions of these companies.
Companies that in the vast majority deal with extraction. Of physical precious metal such as gold companies. Of Bitcoin in the case of companies operating in the mining and blockchain sector.
Gold vs Crypto stocks: the comparison between two ETFs
And to understand how this challenge is going, I put two VanEck ETFs in parallel. The Gold Miners and the Crypto and Blockchain Innovators.
The latter has managed assets that are one tenth compared to the 1.2 billion euros of the ETF that invests in the gold sector. However, the crypto ETF started with prices over 3 years ago and allows us to make an initial comparison of performance and volatility between two niche sectors.
And if the last year has allowed the crypto ETF to double its value, 3 years later the gap is completely different and unfavorable to the new technology. In fact, the performance numbers tell us that the Crypto ETF loses over 50% against the +45% of the ETF that invests in gold companies.
And if we related the return to the risk, the numbers would be even more merciless for the corporations that mine digital gold. The annual volatility of the gold sector is undoubtedly high when compared to the global stock market (27%), but it is nothing compared to the 70% volatility of the ETF that invests in the crypto sector.
These are two very concentrated ETFs in terms of the number of companies present in the basket. The crypto ETF has just 20 companies within it with the top 10 accounting for 60%. Blok, Microstrategy, Coinbase and Marathon are the first by weight. As we can see, they are not all miners and this perhaps makes the comparison with another ETF, the one on gold, which is also very concentrated, a little less pure.
In Gold Miners there are just over 50 companies present, nine tenths of them mining companies, with the top 10 representing 65% of the total.
Two niche ETFs just analyzed by VanEck, but two ETFs that are fighting the challenge of who is more profitable in extracting and processing their respective reserves of value, gold and Bitcoin. For the moment the challenge is won by gold stocks without a shadow of a doubt.
