In brief

  • Bitcoin beat the stock market for 8 of the past 10 years.
  • But when Bitcoin crashed, it did worse than all other asset classes.
  • Goldman Sachs thinks that Bitcoin an asset class.

Investors reaped higher returns from Bitcoin than the stock market for eight out of the past 10 years, data from YCharts shows.

Charlie Bilello, founder and CEO of Compound Capital Advisors, shared data from YCharts yesterday that showed how Bitcoin brought investors astonishing returns when stacked up against other asset classes, such as the stock market, bonds, gold and the US dollar. 

In 2013, investors took home a 5,507% return on their Bitcoin investment. Cumulative returns, which track the total profit for the entire ten years, was 6,271,233%—more than six million percent. (In part, the huge sum is because a decade ago, Bitcoin only cost a few dollars.) The next highest index, the Nasdaq 100, increased by 512.5%. 

Annualized returns, which tracks how much investors made in a single year, were more than 10 times as large as the Nasdaq 100. Bitcoin’s annualized returns from 2011-202 were 203.5%; the Nasdaq returned profits of a flat 20%. 

Of course, when Bitcoin crashed in 2014 and 2018, it crashed hard. So hard, in fact, that Bitcoin was the worst performing asset of the entire market. In 2014, an investment in Bitcoin would have dropped by 58%; in 2018, 75%. 

This year, Bitcoin’s on another bull run. At the end of last month, Bitcoin broke past its all-time high, set in 2017. Its current price is about $19,300. 

But returns from this bull run aren’t as great as they were in 2017. In 2017, a Bitcoin investment would have appreciated by 1,331%. This year, just 162%. 

Investors would have profited from investments in all but one asset class, and risky investments like Bitcoin are far more volatile than the US dollar, which increased by 0.5% in the past decade, or gold, which increased by just 2.2%. 

The only unprofitable investment was commodities, such as petrol, wood, and gasoline. That asset class fell by 6.1%. 

Some institutions, however, argue that Bitcoin is not an asset class. This would undermine the jubilance of these findings. US investment bank Goldman Sachs told investors in May that Bitcoin is not an asset class. 

The bank told investors that Bitcoin is volatile, neither generates cash flow nor earnings through exposure to global economic growth, and doesn’t hedge inflation. 

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” read a slide.

Is the elite investment bank and its army of tireless overachievers wrong? Crypto Twitter sure thinks so.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.