#Bitcoin mining stocks have given investors half of the upside and double the downside, relative to #BTC itself.
Let's talk about it...
Because there are so many miners, the best way to measure their performance is with $WGMI, the BTC Mining ETF.
Many people operate with bias and hand-select the "good ones" (hindsight is always 20/20), so the way to remove that bias, objectively, is to measure the performance of all the miners, on the aggregate.
So we do that with the ETF.
Let's talk about numbers.
Bitcoin $BTCUSD is up +126% YTD.
Bitcoin Mining ETF $WGMI is up +52.6% YTD.
So miners have drastically underperformed, despite their investment thesis being "leveraged" or high-beta BTC for investors to get more upside if they have a bullish outlook for BTC itself.
But let's also talk about the volatility... specifically, the downside volatility.
BTC has had several -20% drawdowns in 2024...
4 to be exact.
But none of those drawdowns were worse than -30%.
#Bitcoin mining stocks $WGMI have had 3 drawdowns of -40% or more in 2024 (-50.1%, -41.1%, and -47.0%) and 5 individual peak to trough declines of more than -20%.
In other words, you get half the upside and double the downside!
Doesn't that sound like a great opportunity?
Hint: no.
To their credit, mining stocks have done well since the September 2024 lows:
• $WGMI is up +83% off the September 6th lows.
• $BTCUSD is up +78% off the September 6th lows.
But during that period (Sept.6), they've had 3 drawdowns larger than -15%. Specifically, these were the drawdowns:
• Down -15.5% starting September 27th
• Down -19.3% starting October 29th
• Down -19.2% starting November 13th
Meanwhile, Bitcoin's 3 largest drawdowns since September 6th have been:
• Down -11.5%
• Down -9.1%
• Down -8.8%
So they've given a bit more upside since September, but significantly more downside & volatility.
In other words, the risk adjusted return (or something like the Sharpe ratio) is less attractive than Bitcoin itself.
These are just simple facts.
