Coingecko: Six Charts to Understand the Rise of BTC Compared to Traditional Assets in the Past Decade

Author: Prem Reginald, CoinGecko; Translation: Baishui, Golden Finance

Bitcoin (BTC) is known as the 'magical internet currency' and may be considered a legitimate investment asset alongside traditional assets such as stocks, commodities, and bonds. In terms of a 10-year return, BTC has indeed performed exceptionally well, with a return rate of 26,931.1%. While these numbers are impressive, it is important to consider its short-term and long-term performance relative to other assets.

Which asset has performed the best in year-to-date, one year, three years, five years, and ten years?

The performance in different time frames reveals the strengths and weaknesses of each asset. In 2024, BTC is the best performing asset with a return of 129.0%, highlighting its high growth potential. Gold closely follows with a stable year-to-date (YTD) return of 32.2%, proving its reliability as a traditional store of value. The S&P 500 index remains strong with a return of 28.3%. However, oil has a negative return of -0.13%, while U.S. Treasury bonds have moderate returns, with a 5-year bond return of 5.3% and a slightly higher 10-year bond return of 8.2%.

In terms of the one-year time frame, Bitcoin continues to outperform other assets with a return rate of 153.1%. Gold has a return rate of 34.8%, followed by the S&P 500 index with a return rate of 33.1%. The strength of these three assets reflects the stability of the market last year. However, government bonds reflect sensitivity to economic changes, with a return rate of -4.3% for 5-year bonds and -2.6% for 10-year bonds. These data reveal how bonds fluctuate with changes in interest rates and fiscal policies.

Over the past three years, as the economy has become more stable and ideal, the performance landscape has changed, benefiting bonds. Government bonds lead the way, with a return rate of up to 267.8% for 5-year government bonds and 218.0% for 10-year government bonds. Bitcoin follows closely behind with a return rate of 79.0%, while gold provides a safeguard for market uncertainty with a return rate of 53.1%. Crude oil is the only underperforming asset during this period, with a return rate of 6.1%.

Within five years, Bitcoin will rise to its peak, with a return rate as high as 1,283.6%. The S&P 500 Index and gold remain stable, with returns of 96.7% and 84.6% respectively, both yielding substantial and sustained profits. Government bonds also perform well, with a 5-year bond at 157.1% and a 10-year bond at 149.9%. Crude oil has limited growth, only 25.3%, which seems less attractive for long-term investment. This period demonstrates the potential for Bitcoin to achieve substantial returns in the mid-term investment window and balance with the stable growth of stocks and gold.

From a full 10 years perspective, bitcoin's growth rate has reached an unparalleled 26,931.1%, confirming its transformative investment potential for early adopters. While other assets lag far behind, they still provide stable returns, with the S&P 500 index at 193.3% and gold at 125.8%. Bonds also maintained value, with a 5-year bond return rate of 157.1% and a 10-year bond return rate of 86.8%. However, oil's return rate lags at 4.3%. The conclusion drawn from this ten-year timeline indicates that bitcoin is the ultimate high-growth asset, while gold, bonds, and stocks provide safer, lower-return alternatives for risk-averse investors. However, bitcoin remains a relatively new asset, with a market value far smaller than other assets. This smaller base allows it to grow at a faster pace.

Has Bitcoin been volatile in the past 10 years?

Bitcoin has seen significant returns and huge volatility over the past decade. The lowest price of BTC was $172.15, and the highest was $103.6. The chart below clearly shows the BTC cycle, which coincidentally occurs every four years after the BTC halving. Over the course of these 10 years, there have been two 'bull market' cycles, occurring in 2017-2018 and 2020-2021, and we are currently in one of them. At the end of each cycle, the BTC price tends to plummet by over 70% from its peak, resulting in BTC volatility. This extreme volatility highlights the high-risk, high-return nature of Bitcoin, making it attractive to growth-oriented investors but challenging for those seeking stability.

Is the performance of Bitcoin related to other assets?

Setting aside the volatility, the relationship between Bitcoin and other major assets such as the S&P 500 index and gold can further reveal its unique behavior. Correlation analysis reveals how Bitcoin either aligns with or diverges from traditional markets:

Bitcoin and S&P 500 Index

Over the years, the correlation between Bitcoin and the S&P 500 index (as indicated by the blue line) has been unstable, often hovering near zero levels until 2018. This low correlation suggests that Bitcoin's performance during this period is largely independent of the stock market. However, since 2020, this relationship has strengthened, with Bitcoin's correlation to stocks becoming closer during major economic events such as the COVID-19 pandemic. The price correlation also aligns with the upward trends of Bitcoin in 2018, 2020, and 2020.

Bitcoin and Gold

In terms of gold, the correlation of Bitcoin is inversely proportional to its correlation with the S&P 500. This suggests that Bitcoin and gold (shown in green) are often independent of each other, although both are considered alternative investments. The correlation is also observed to be inversely related to the BTC price. As the price rises, the correlation decreases, and vice versa. This indicates that when Bitcoin performs poorly, investors tend to turn to gold investments. However, the temporary surge in correlation usually occurs during macroeconomic events, reflecting moments when both assets respond to similar market conditions. Nevertheless, Bitcoin has not yet become a digital equivalent of gold.

Bitcoin vs. Traditional Assets: A Ten-Year Comparison

The price returns of Bitcoin and traditional assets over a period of 10 years are as follows: