And then there’s bitcoin’s performance. With little attention devoted to this emerging asset class, many are surprised to discover that bitcoin is the best-performing asset since its inception. Its returns make it the best investment for the past 1-year, 3-year, 5-year and 10-year periods as of May 2020, according to OffTheChainCapital.
That said, bitcoin is an extremely volatile asset. The S&P 500 Stock Index’s average return is 10% per year; bitcoin often moves that much in a day – and it’s not unheard of for that to occur in a single hour.
In 2013, for example, bitcoin rose 5,866% – followed by a 61% fall the following year. Something similar happened in 2017 (1,338% rise) and 2018 (73% crash) as the chart below from OffTheChainCapital shows.
While traders and speculators enjoy trying to guess bitcoin’s next move, investment professionals like yourself know the folly of trying to engage in market-timing. That tactic is difficult enough with stocks; it’s downright foolish to attempt with bitcoin. Indeed, despite bitcoin’s long-term success as an investable asset, those who miss even a few of its biggest moves miss the bulk of the gains, as shown in the charts below.