Bitcoin (BTC) volatility continues to stand out in 2022. Cryptocurrency is recording significant sell-offs, like other traditional asset classes, due to the macroeconomic situation. Despite Bitcoin's volatility, this asset has shown astronomical returns over the long term, eclipsing other asset classes.
Data retrieved from the Finbold ROI tool indicate that Bitcoin’s five-year return on investment has outperformed the stocks of five leading banks at an average of 549.35%, according to Finbold. In particular, the crypto has the highest returns against Citi at 839.17% and Wells Fargo, which stands at 728.34%.
Elsewhere, Bitcoin returns against Goldman Sach stand at 407.46% followed by JPMorgan at 402.06%. Bank of America lies in the fifth spot among the top five major five banks’ stocks, with Bitcoin returns standing at 369.75% higher. Notably, the percentage values indicate how much a five-year Bitcoin investment outperformed traditional banks’ stocks’ ROI.
Bitcoin's performance is truly unexpected as the cryptocurrency is compared to financial institutions that have been around for decades, while the crypto asset is only a little over a decade old.
Following the unprecedented growth of Bitcoin, some well-known banks have been forced to use cryptocurrencies as a growth strategy along with entering the digital asset market. Depending on how the regulatory aspect develops, some banks are predicted to allow customers to directly invest in Bitcoin. In such scenarios, both parties are likely to benefit as their shares rise in value and Bitcoin will benefit from the institutional contribution. Some banks have started using the services of cryptocurrency custodians.
Despite belonging to different asset classes, Bitcoin and stocks have shown a strong correlation in recent months. Both assets correlated due to prevailing market conditions characterized by high inflation and tightening of the Federal Reserve's measures caused by higher interest rates.
Also, even though Bitcoin is a volatile asset, many equity investors include both assets in the same portfolio. The performance of Bitcoin has led to an exponential acceptance of cryptocurrencies as a new asset class gaining a place in investor portfolios.
© 2022, Eva Fox | Tesmanian. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.