Bitcoin may have become a legitimate investment asset alongside traditional assets like stocks, commodities and bonds.
Article written by: Prem Reginald
Source: CoinGecko
Article compiled by: Ada, MetaEra
Hailed as the “magic internet currency,” Bitcoin has perhaps become a legitimate investment asset alongside traditional assets like stocks, commodities, and bonds. Looking at its returns over the past 10 years, Bitcoin has really shined, achieving a return of 26,931.1%. Imagine if $100 was invested in 2014, it would be worth $26,931.1 today. While these numbers are impressive, it’s important to look at how it has performed relative to other assets in the short and long term.
Which asset has performed best over the past 1, 3, 5, 10 years?
Performance over different time frames can reveal the strengths and weaknesses of each asset. In 2024, Bitcoin was the best performing asset with a return of 129.0%, highlighting its high growth potential. It was followed closely by Gold, which had a solid year-to-date (YTD) return of 32.2%, proving its reliability as a traditional store of value. The S&P 500 remained strong with a return of 28.3%. However, crude oil fell, returning -0.13%, while US Treasuries had modest returns, with the 5-year Treasury returning 5.3% and the 10-year Treasury returning slightly more at 8.2%.
Looking at the one-year timeframe, Bitcoin continues to outperform other assets with a return of 153.1%. Gold returned 34.8%, followed by the S&P 500 with a return of 33.1%. The strong performance of these three assets shows the stability of the market over the past year. However, U.S. Treasuries reflect sensitivity to economic changes, with returns of -4.3% and -2.6% for 5-year and 10-year bonds, respectively. These numbers show that bonds fluctuate with changes in interest rates and fiscal policy.
Over the past three years, the performance pattern of various assets has changed with the demand for economic stability. US Treasuries led the gains, with the 5-year Treasury bond returning an astonishing 267.8%, followed by the 10-year Treasury bond with a return of 218.0%. During this period, Bitcoin returned 79.0%, while gold ranked second with a solid return of 53.1%, providing security amid market uncertainty. Crude oil was the only asset to perform poorly, with a return of only 6.1%.
Over a five-year period, Bitcoin leapt to the top, returning an astonishing 1,283.6%. The S&P 500 and gold maintained returns of 96.7% and 84.6%, respectively, each providing substantial and stable returns. Treasury bonds also performed well, with 5-year bonds returning 157.1% and 10-year bonds returning 149.9%. Crude oil had limited growth, returning 25.3%, making it less attractive for long-term investments. This period shows Bitcoin's potential in the medium-term investment window
The potential for high returns within a few years is balanced by steady growth in stocks and gold.
Over a ten-year period, Bitcoin’s growth has been unmatched at 26,931.1%, confirming its transformative investment potential for early investors. While other assets have lagged far behind, they have still provided solid returns, with the S&P 500 returning 193.3% and gold at 125.8%. Treasury bonds have also maintained their value, with the 5-year Treasury bond returning 157.1% and the 10-year Treasury bond returning 86.8%. However, crude oil has lagged with a return of just 4.3%. This ten-year long-term view reveals Bitcoin’s position as the highest growth asset, while gold, bonds, and stocks offer safer, lower-return alternatives for risk-averse investors. However, Bitcoin is still a relatively new asset with a much smaller market cap than other traditional assets, but this smaller base has enabled it to grow at a faster rate.
Has Bitcoin been highly volatile over the past 10 years?
Bitcoin’s huge gains over the past decade have been accompanied by significant volatility. Bitcoin’s price has been as low as $172.15 and as high as $103,679. The chart below clearly shows the Bitcoin cycle that coincides with the Bitcoin halving event that occurs every four years. During this 10-year period, there have been 2 “bull market” cycles, in 2017-2018 and 2020-2021, and we are currently in the midst of a new cycle. At the end of each cycle, Bitcoin prices tend to drop more than 70% from their peak. Such wild price swings underscore the high-risk, high-reward nature of Bitcoin, which makes it attractive to investors seeking growth but challenging for those seeking stability.
Is Bitcoin's performance correlated with other assets?
In addition to volatility, Bitcoin’s relationship with other major assets, such as the S&P 500 and gold, further reveals its uniqueness. Correlation analysis reveals how Bitcoin aligns, or fails to align, with traditional markets:
Bitcoin and the S&P 500
Over the years, Bitcoin's correlation with the S&P 500 (shown as the blue line) has been volatile, often close to zero until 2018. This low correlation suggests that Bitcoin has operated largely independently of the stock market during this period. However, since 2020, the relationship between the two has strengthened, with Bitcoin becoming more closely tied to stocks during major events such as the COVID-19 pandemic, and price-corresponding to Bitcoin's surges in 2018, 2020, and 2024.
Bitcoin and Gold
In the case of gold, the correlation with Bitcoin is inversely proportional to its correlation with the S&P 500. This suggests that, although both Bitcoin and gold (shown as the green line) are considered alternative investments, they tend to behave independently. It can also be observed that this correlation moves in the opposite direction of Bitcoin's price: when the price rises, the correlation decreases, and vice versa. This suggests that when Bitcoin performs poorly, investors tend to turn to gold investments. However, during macroeconomic events, there are usually short-lived spikes in correlation, reflecting that the two assets respond to similar market conditions during this time. Despite this, Bitcoin has yet to fully establish its position as a digital gold equivalent.
A decade-long comparison of Bitcoin and traditional assets
Here’s how Bitcoin’s price returns compare to traditional assets over a 10-year timeframe:
