Bitcoin’s Risk and Return Explained in 7 Amazing Charts (That You’ve Never Seen Before)
A finance professor explains how Bitcoin has really performed relative to the stock market
What’s bitcoin really like as a potential investment, and how does it compare with traditional investments in terms of risks and recent returns? Will bitcoin soon be part of a new cryptocurrency asset class that all investors should consider as part of their investment portfolio? We now have over six-and-a-half years of price data since mid-September 2014, when U.S. regulators approved the first derivative product involving bitcoin. So, to answer those questions, I gathered and analyzed price data on bitcoin, the S&P 500, a bond index, gold, the dollar, and the FANG growth stocks — Facebook, Amazon, Netflix, and Google, now Alphabet. (If you want to know more about the data, details are presented in an Appendix at the end of this article.)
There are lots of lenses through which to view cryptocurrencies such as bitcoin, for example: evaluating the fundamentals of bitcoin as a technology; its use as a currency, particularly with newsworthy events such as Tesla’s purchase of $1.5 billion of bitcoin and with the initial public offering of Coinbase Global, Inc., a cryptocurrency exchange; and bitcoin’s environmental impact…
