Bitcoin & Gold Aren’t Competitors

Wilshire Phoenix’s William Cai says both assets have a role in investors’ portfolios.

Senior ETF Analyst
Reviewed by: Sumit Roy
Edited by: Sumit Roy

William CaiWilliam Cai is co-founder and partner at Wilshire Phoenix, a financial services company that offers commodity-based investment solutions. His firm’s first attempt to bring a bitcoin product to market was shot down by the SEC in 2020, but it has persevered. In April, the company filed for an initial public offering for shares of the wShares Bitcoin Commodity Trust, an over-the-counter-traded bitcoin product with a 0.90% expense ratio.

The wShares Bitcoin Commodity Trust would compete with the highly popular Grayscale Bitcoin Trust (GBTC), which has thrived in the absence of a U.S.-listed bitcoin ETF. recently spoke with Cai to get his take on bitcoin as an investable asset, and in particular, its merits versus gold. You’ve discussed how bitcoin and gold aren’t competitors, but complements. What do you mean by that?

William Cai: Gold and bitcoin share many similarities. They can both function as a store of value and medium of exchange. They are both scarce and are mined.

But to an investor, what’s more important is their shared investment properties as diversifiers and hedgers within a portfolio of assets. Both gold and bitcoin have low correlations to other asset classes, and thus may reduce a portfolio’s risk-to-return profile. Both are global assets priced in dollars, and thus are potential hedges to inflation.

However, gold and bitcoin have critical differences that enable them to complement each other within an investor’s portfolio. They have low correlation not only to other assets but also to each other.

Bitcoin has so far behaved as a risky asset; it sells off during times of risk-off and flight to safety, whereas gold is a typical safe haven asset. Bitcoin also has significant growth potential as the bellwether of the nascent cryptoasset and blockchain space.

These notable differences allow bitcoin and gold to contribute value to a portfolio during different economic and market regimes. Given your view, why do you think so many people call bitcoin digital gold, or, gold 2.0? Is it a fundamental misunderstanding of the differences between the two assets?

Cai: “Digital gold” can be a useful metaphor that points to bitcoin’s shared properties with gold. But investors should look past simplified descriptions and analyze bitcoin’s properties as an investment. Instead of focusing on bitcoin versus gold, explore how bitcoin, as a new asset, can contribute to one’s portfolio or trading strategy along with other assets including gold. Investors have historically been happy with fairly modest returns from gold; they use it as a hedge or something that preserves their purchasing power. Bitcoin, on the other hand, has delivered enormous returns over a very short time period. In other words, gold is a much more stable asset with lower return expectations compared to bitcoin. Is that a dynamic you expect to continue, or will bitcoin eventually become more like gold?

Cai: We’re in the early days of blockchain and cryptoasset development. We believe bitcoin’s price volatility will moderate over time. However, we believe the popular comparison between gold and bitcoin will also dissipate along with the eventual decline of bitcoin dominance within the cryptoasset space. How should investors should value bitcoin? What is the bull case, and how will investors know when it reaches “fair value?”

Cai: Bitcoin valuation is difficult. And given the short history of bitcoin and cryptoassets in general, the jury is still out on any of the valuation methodologies.

However, the past few years have shown that blockchain technology and cryptoassets are here to stay with wider retail and institutional adoption, and the regulatory frameworks that are gradually being created.

We believe bitcoin and the cryptoasset space have great growth potential and can help diversify an investor’s portfolio. But we will leave it to others to throw darts at a long-term price prediction. You recently put out plans for an over-the-counter bitcoin trust. Is this something that would compete with GBTC? What makes this a good product, and do you still have plans for a bitcoin ETF?

Cai: The wShares Bitcoin Commodity Trust is created to offer a better product than what’s in the market. It has features that will rein in the massive premium and discounts occurring in current products that are hurting investors.

While we believe a bitcoin ETF will eventually happen in the U.S., it’s unlikely to happen this year or the next. Our bitcoin trust looks to fulfill current investor demand for a product that’s transparent, liquid and will closely reflect the fair value of bitcoin.

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2

Sumit Roy is the senior ETF analyst for, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for, with a particular focus on stock and bond exchange-traded funds.

He is the host of’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays,’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.