Cryptocurrencies: Hearts of Gold?

Bitcoin, the first cryptocurrency, was introduced to the world in 2008, just after the collapse of Lehman Brothers and at a time when public confidence in traditional financial institutions was particularly low.

Key Takeaways

• From small and obscure beginnings, cryptocurrencies have infiltrated the mainstream financial system. With a share of more than 60%, bitcoin dominates what is now a $3.0 trillion cryptocurrency market.¹
• The election of “crypto president” Donald Trump has ushered in a number of crypto-friendly federal actions, including the establishment of a strategic bitcoin reserve and digital assets stockpile.
• Bitcoin’s characteristics, most notably its scarcity and independence from sovereign oversight, have prompted some to position it as a potential hedge and long-term store of value—i.e., “digital gold.”
• Given its high volatility and tendency to trade directionally with equities, bitcoin remains a risky proposition, in our view. Instead, we continue to believe a strategic allocation to gold represents the most effective potential hedge against a range of adverse developments, as it has for millennia.

1,2. Source: CoinGecko; data as of April 30, 2025.

The opinions expressed are not necessarily those of the firm. These materials are provided for informational purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation to buy, hold or sell or the solicitation or an offer to buy or sell any fund or security.

Past performance is not indicative of future results.

Risk Disclosures

All investments involve the risk of loss of principal.

An investment in bitcoin is speculative and entails significant risks, including potential loss of all or a substantial portion of the principal investment.

Cryptocurrency prices in many cases are highly volatile, and these digital assets should be considered a high-risk investment. Investment in gold and gold-related investments present certain risks, including political and economic risks affecting the price of gold and other precious metals like changes in US or foreign tax, currency or mining laws, increased environmental costs, international monetary and political policies, economic conditions within an individual country, trade imbalances and trade or currency restrictions between countries. The price of gold, in turn, is likely to affect the market prices of securities of companies mining or processing gold and, accordingly, the value of investments in such securities may also be affected. Gold-related investments as a group have not performed as well as the stock market in general during periods when the US dollar is strong, inflation is low and general economic conditions are stable. In addition, returns on gold-related investments have traditionally been more volatile than investments in broader equity or debt markets. Investment in gold and gold-related investments may be speculative and may be subject to greater price volatility than investments in other assets and types of companies.

Strategies whose investments are concentrated in a specific industry or sector may be subject to a higher degree of risk than funds whose investments are diversified and may not be suitable for all investors. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Bitcoin is a digital currency (aka, cryptocurrency) for use in peer-to-peer online transactions.

Cryptocurrency refers to any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.

Exchange-traded funds (ETFs) are listed investment vehicles that seek to provide exposure to a benchmark, index or actively managed strategy.

Indexes are unmanaged and do not incur management fees or other operating expenses. One cannot invest directly in an index.

S&P 500 Index (Gross/Total) measures the performance of 500 of the top companies in the leading industries of the US economy and is widely recognized as a proxy for the US market as a whole. A total-return index tracks price changes and reinvestment of distribution income.

Bloomberg US Treasury Total Return Index (Gross/Total) measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury, including securities with a remaining maturity of at least one year. A total-return index tracks price changes and reinvestment of distribution income.

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