Digital currency Bitcoin (BTC) has provided better returns than most other investment options over the last two years. It has outperformed both the equity and commodity markets by a huge margin.
According to publicly available data, the trading price of Bitcoin went up from $936 on March 25, 2017, to $5,399 on March 24, 2019. The sharp rally translates to a 476 percent return on investment for the cryptocurrency within a two-year time span.
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Is Bitcoin The Best Investment Option?
The S&P 500 gave a two-year return of 19.9 percent. The same trend was observed across equity markets of developed countries.
On the other hand, commodities such as gold and oil gave a return of 1.3 and 31 percent over the same period.
Analysts attributed the sluggish return from equity markets to slowing global growth and a tightening monetary policy by the Federal Reserve.
Two year returns:
S&P 500: 19.9%
Gold: 1.3%
Oil: 31%
Bitcoin: 457%The non-correlated, asymmetric nature of Bitcoin makes it imperative that every portfolio include some exposure to the digital currency. #GetOffZero
— Anthony Pompliano 🌪 (@APompliano) April 23, 2019
The sharp crypto rally of 2017 made Bitcoin and other digital currencies a household name. The price of Bitcoin topped out near $20,000 towards the end of the rally in January 2018.
SponsoredOil and gold prices, however, have traded in a range-bound manner. Lower oil prices can be attributed to slowing demand for crude due to the slump in global growth.
Analyzing Bitcoin’s Sharp Price Rise
Bitcoin (BTC), like any other digital currency, sees its price move proportionately to its demand in the open market.
Data from Statista shows an almost seven-fold increase in the number of Bitcoin wallets between 2016 and 2019. The total number of Bitcoin wallets is currently estimated to be 35 million. This increase in wallet count has helped even the distribution of bitcoins among the public, as well.
Between Q1 2016 and Q1 2017, the number of Bitcoin wallets doubled. This shows that the cryptocurrency community started to get optimistic about BTC and its future just prior to the 2017 rally.
Notably, the oldest digital currency was only released in 2009. Gold and oil, on the other hand, have been trading on the open market for over 100 years now. Their prices have had time to stabilize — while the cryptocurrency industry is still in its early stages and, therefore, highly volatile.
Do you think Bitcoin returns will be better than other investment options in the coming years? Let us know in the comments below!Â
[Disclaimer: This article is not financial advice.]
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