Cite This Comparison
"Bitcoin vs Gold (BTC vs XAU): Returns, Risk & Volatility (2025)." Gale Finance, December 31, 2025. https://www.gale.finance/compare/btc-vs-xau-2025 Free to use with attribution. Please link back to this page or gale.finance.
Analysis period: 2025-01-01 to 2025-12-31
Relative Performance of BTC vs XAU (Normalized to 100)
Normalized to 100 at start date for comparison
Key Takeaways
- Total Return: BTC delivered a -6.3% total return, while XAU returned +62.5% over the same period. XAU outperformed on total returns.
- Risk-Adjusted Return (Sharpe Ratio): BTC had a negative Sharpe (-0.05) while XAU was positive (2.34), indicating XAU had meaningfully better risk-adjusted performance in this period.
- Volatility (Annualized): BTC was more volatile, with 42.0% annualized volatility, versus 19.3% for XAU.
- Maximum Drawdown: XAU's maximum drawdown was -9.7%, while BTC experienced a deeper drawdown of -32.1%.
Bitcoin vs Gold Correlation
Bitcoin and Gold were negatively correlated in 2025. With a negative correlation of -0.06, these assets tended to move in opposite directions, potentially offering strong diversification benefits.
For portfolio construction, this negative correlation suggests that combining BTC and XAU could significantly reduce portfolio variance through offsetting movements.
| Metric | Metric | Value |
|---|---|---|
| Current (30-day) | 0.16 | |
| Average (full period) | -0.06 | |
| Minimum | -0.50 | |
| Maximum | 0.44 |
Correlation measures how closely two assets move together. Values near +1 indicate strong co-movement, near 0 indicates independence, and negative values indicate inverse movement.
Investment Comparison
If you invested $10,000 in each asset on January 1, 2025:
Difference: $6,879.929 (XAU ahead)
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Bitcoin and Gold: Risk Analysis
Bitcoin experienced its maximum drawdown of -32.1% from 2025-10-07 to 2025-11-23. It has not yet recovered to its previous peak.
Gold experienced its maximum drawdown of -9.7% from 2025-10-20 to 2025-11-04. It has not yet recovered to its previous peak.
Smaller drawdowns and faster recoveries indicate lower downside risk and greater resilience during market stress.
Sharpe Ratio of BTC and XAU
Sharpe ratio measures return per unit of risk (volatility). A higher Sharpe indicates better risk-adjusted performance. BTC had a negative Sharpe (-0.05) while XAU was positive (2.34), indicating XAU had meaningfully better risk-adjusted performance in this period.
A Sharpe above 1.0 is generally considered good, above 2.0 is excellent. Negative Sharpe means the asset underperformed the risk-free rate. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).
Sortino Ratio of BTC and XAU
Sortino ratio measures return per unit of downside risk. Unlike Sharpe, it only penalizes negative volatility. XAU had better downside-adjusted returns.
A higher Sortino is better. It's particularly useful for assets with asymmetric volatility (big gains, smaller losses). Downside volatility: BTC 29.0% vs XAU 13.9%. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).
Full Comparison of Bitcoin vs. Gold (2025)
| Metric | BTC | XAU |
|---|---|---|
| Total Return | -6.3% | +62.5% |
| Annualized Volatility | 42.0% | 19.3% |
| Sharpe Ratio | -0.05 | 2.34 |
| Sortino Ratio | -0.07 | 3.26 |
| Max Drawdown | -32.1% | -9.7% |
| Avg Correlation to S&P 500 | N/A | N/A |
Bitcoin vs Gold: Frequently Asked Questions
Which had higher volatility: BTC or XAU?
BTC showed higher volatility at 42.0% annualized, compared to 19.3% for XAU During 2025. Higher volatility meant larger price swings in both directions.
Did BTC provide diversification when held with XAU?
BTC and XAU were negatively correlated in 2025, with an average correlation of -0.06. This negative correlation suggested strong diversification benefits through offsetting movements.
Which had better risk-adjusted returns: BTC or XAU?
BTC had a negative Sharpe (-0.05) while XAU was positive (2.34) During 2025, indicating XAU had meaningfully better risk-adjusted performance.
Could BTC and XAU have been combined in a portfolio?
Yes, though allocation sizing mattered. Their negative correlation could have significantly reduced portfolio variance through offsetting movements. BTC's higher volatility (42.0%) meant even small allocations can materially impact overall portfolio risk.