With significant spikes over the past decade, cryptocurrencies have proven to be a worthwhile investment for many. Now belonging to the asset class, Bitcoins have outperformed traditional assets and we see a switch in the market from altcoins to bitcoins!
What is an asset class?
A collection of investments having similar characteristics that are subjected to the same laws and regulations is an asset class. Gold, bond, stock, real estate, and fiat currencies are popularly known and traditionally invested assets.
Bitcoin as an asset class- is it questionable?
A controversy that existed years ago has been resolved not just by declaring Bitcoin an asset class but as Goldman Sachs mentions, ‘an investable asset class.’ The tables have turned and with a 100x more return than NASDAQ, Bitcoin is now the best-performing asset of the decade.
Before directing into crypto investments and bidding goodbye to the traditional asses, you must understand its pros and drawbacks. While one must get attracted to the Bitcoin features of transparency, liquidity, accessibility, and higher return potential, one must also be aware that issues with scalability and lack of government regulations can stand as a concerning factor for many.
As per the asset class total return reports over the last 10 years, we see an examination of top-performing assets from the year 2011 to 2021, and on top stands BTC with the highest returns. We found an extended 20,000,000% cumulative gains and a 230% annualized scale return.
Bitcoin’s correlation with different assets
Gold- A long-running asset of value, gold has been used by investors during times of market turndowns. Bitcoins, although a newer form of the asset class, has been of help during times of recession. Compared to the rarity of both, Bitcoin stands higher in value for it has a limit of 21M and it has also exceeded the ROI that gold provided for years. The return was quite unexpected as we see a 70% Bitcoin return rate in 2021 where gold stood at only 7%.
Real Estate- It is true that real estate investments have high returns even though there is a cost that the investor has to initially spend on maintenance. However, if you take into account the reports of the last five years, you can see that there is a better yield from investing in Bitcoins than in estate.
With an estimated average, making a 20% down payment on a home will provide you a profit of around 79.64%, whereas, with the same down payment, you will see a 3,112% profit in five years.
Stocks- The most powerful stock exchange, namely The New York Stock Exchange or NYSE was pressed down with the rapid recognition of Bitcoins. From February 2022 reports, we see Bitcoin outperforming the top six tech stocks, with an average ROI of 12.24%.
One cannot deny the fact that it is an asset worth investing in!
Concluding words
With huge return rates, Bitcoin is becoming increasingly popular and is getting accepted as a mode of payment and as a transactional currency. If you are an investor willing to face market volatility, this is the right place to profit from in years!
