Bitcoin Returns vs. Main Asset Classes

Bitcoin had a median annual return 230% within the 10 years between March 2011 and 2021, exhibiting that, regardless of its volatility, it's a top-performing asset class.

Bitcoin had a median annual return of 230% over the 10 years between March 2011 and 2021, showing that despite its volatility, it is a top-performing asset class.

So, to explore this further, Visual Capitalist has teamed up with Franklin Templeton to uncover historical bitcoin returns and how they compare against other major asset classes.

Bitcoin vs. Common Assets

One way to express risk-adjusted returns is using the Sharpe ratio, which outlines an investment’s excess returns relative to its volatility.

Put simply, the higher the Sharpe ratio, the better the risk-adjusted return. A Sharpe ratio of three or above would translate to ‘excellent’ risk-adjusted returns, while a Sharpe ratio of less than one would be ‘sub-optimal.’

Despite the risk and volatility involved, bitcoin returns have been positive over one, five, and ten years.

Bitcoin vs. Tech Stocks

Tech stocks like Google and Microsoft are often used as examples of assets with positive risk-adjusted returns. However, bitcoin returns have also been strong and have offered more risk-adjusted returns than most tech stocks over the past year.

Simply Investing in Bitcoin

Bitcoin and other emerging digital assets have shown that they can offer an attractive risk premium to investors willing to tolerate high volatility over the long term, especially when compared to other major assets.

In the second part of the Bitcoin Demystified series, we explore what opportunities Bitcoin halvings could present for investors.

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