The relationship between bitcoin and gold

Bitcoin has been called a digital gold since Bitcoin and gold have several similar properties. They are used as money, reserve and investment. In this research,we will examine the relationship between Bitcoin and gold in 3 aspects: store of value, correlation, and casual relationship with the data from investing.com and Yahoo Finance over the period of 19 July 2010 (when Bitcoin first recorded) to 1 November 2021 (this paper is written). In the store of value aspect, we analyze returns, volatility, winning day, cost adjusted winning day, and post purchase average returns of Bitcoin and gold. The correlation between Bitcoin and gold is done with rolling window Pearson R correlation with 93- and 161-days window size on daily data. Lastly, the casual relationship was analyzed by the rolling window Granger causality test.Bitcoin’s store of value outperforms gold in most store of values measurements except the volatility. Bitcoin’s average yearly return is 914% and gold’s is 5.7%. Also, the 365 days of Winning Days, Cost-adjusted Winning Days, and Post Purchase Average Return of Bitcoin won gold in all aspects at 268 vs. 202, 210 vs. 7, and 490% vs. 3% respectively whereas the yearly volatility of Bitcoin worse than that of gold at 1,880% vs. 16%. The correlation between Bitcoin and gold is highly correlated in both positive and negative sides (approximately +75% and -75% maximum and minimum) at many periods of time. For the casual relationship, we found that both Bitcoin and gold prices significantly negatively influence each other many times in a year throughout the whole data. Also, we found 93 and 161 days as a cycle of trends where investors could use these numbers to readjust their portfolio i.e., every 93 and 161 days.The results of this study reveal many important relationships between Bitcoin and gold which might be useful for the investors to understand the behavior ofboth assets.