Ranked: Bitcoin Returns vs. Major Asset Classes

Bitcoin Returns vs. Major Asset Classes

Bitcoin had an average annual return 230% in the 10 years between March 2011 and 2021, showing that, despite its volatility, it’s a top-performing asset class.

So, to investigate this further, Visual Capitalist has joined forces with Franklin Templeton to explore historical bitcoin returns and how they compare against other major asset classes.

Bitcoin vs. Popular Assets

One way to express risk-adjusted returns is using the Sharpe ratio, which describes an investment’s excess returns versus its volatility. 

So, the higher the Sharpe ratio, the better the risk-adjusted return. A Sharpe ratio of three or above would translate to ‘excellent’ risk-adjusted returns, whereas a Sharpe ratio of less than one would be ‘sub-optimal.’

Despite risk and volatility, bitcoin returns have been positive over one, five, and ten years.

Asset10-Year Sharpe Ratio5-Year Sharpe Ratio1-Year Sharpe Ratio

Bitcoin0.850.551.83

NASDAQ 100 Index0.760.741.72

S&P 500 Index0.540.541.76

Gold0.280.51.32

U.S. Dollar0.21-0.02-0.19

Bitcoin vs. Tech Stocks

Tech stocks like Google and Microsoft are often used as examples of assets with positive risk-adjusted returns. However, bitcoin returns have also been strong and have offered more risk-adjusted returns than most tech stocks over the past year.

Easily Invest in Bitcoin

Bitcoin and other emerging digital assets have shown that they can offer an attractive risk premium to investors willing to tolerate significant volatility over the long term, especially when compared to other major assets. 

In the second part of the Bitcoin Demystified series, we explore what opportunities Bitcoin halvings could present for investors.