Ray Dalio’s suggestion that buyers allocate roughly 15% of a portfolio to gold and Bitcoin has drawn renewed consideration amid issues over rising US debt and chronic deficit spending. The rationale behind the view centres on defending portfolios towards forex debasement and enhancing resilience during times of market stress.

To guage that method, analysts at Bitwise performed a stress test throughout main fairness drawdowns over the previous decade, evaluating a standard 60/40 portfolio with variations that included gold, Bitcoin, or each property collectively.

Throughout every main downturn – together with 2018, 2020, 2022 and the 2025 tariff-driven sell-off – gold persistently decreased draw back threat relative to equities and Bitcoin. In 2018, whereas equities and Bitcoin skilled sharp losses, gold delivered constructive returns, offering defensive safety throughout heightened volatility. An identical sample appeared throughout the COVID-driven market collapse in 2020, the place gold’s decline remained modest in contrast with the steep drawdowns seen elsewhere.

The pattern continued in 2022, when inflation pressures, aggressive price hikes and the FTX collapse weighed closely on threat property, but gold once more outperformed each equities and Bitcoin. Throughout the 2025 trade-related market pullback, gold as soon as extra delivered positive factors whereas equities and Bitcoin declined. These outcomes display gold’s function as a stabilising drive during times of market stress.

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Returns Following Market Bottoms

Nevertheless, post-drawdown recoveries revealed a special dynamic, with Bitcoin persistently producing stronger upside throughout market rebounds. Following prior market bottoms, Bitcoin materially outpaced each equities and gold throughout restoration phases, significantly in 2020 and 2023.

Measured throughout full market cycles slightly than particular person phases, portfolios holding each gold and Bitcoin delivered stronger risk-adjusted outcomes than these holding both asset alone. 

The mixed allocation produced a materially larger Sharpe ratio than a standard portfolio, highlighting its effectiveness as a long-term diversification technique. Dalio’s broader argument emphasises that diversification, slightly than asset choice alone, is essential to navigating forex debasement and market uncertainty.

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