Bitcoin's Remarkable Decade May Be Coming to an End
After a Dazzling First Decade, Bitcoin's Risk-Adjusted Return Has Been Unremarkable
WEB: Finally, It Sorts Out That the COVID-19 Pandemic Heavily Affected the Cryptocurrency Markets
After a dazzling first decade, Bitcoin's risk-adjusted return has been unremarkable. WEB: Finally, it sorts out that the COVID-19 pandemic heavily affected the cryptocurrency markets. WEB: Governments around the world are building out new rules for cryptocurrencies. WEB: However, the most profound risks to cryptocurrency investing may lie ahead rather than in the rear-view.
Bitcoin's price has been on a wild ride in recent years, but its risk-adjusted return has been unremarkable. Over the past decade, Bitcoin's price has increased by more than 200,000%, but its annualized volatility has also been high, at around 80%. This means that Bitcoin's price has been very volatile, and investors have had to stomach large swings in value in order to earn a return.
In comparison, the S&P 500 index has had an annualized return of around 10% over the past decade, with a much lower volatility of around 15%. This means that investors in the S&P 500 have earned a higher return with less risk than investors in Bitcoin.
Of course, past performance is not necessarily indicative of future results. However, Bitcoin's risk-adjusted return has been unremarkable to date, and there are no guarantees that it will improve in the future.
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