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Bitcoin’s Mesmerizing 457% Two-Year Returns Leave the Dow in the Dust

Last Updated March 4, 2021 2:31 PM
Gerelyn Terzo
Last Updated March 4, 2021 2:31 PM

By CCN.com: Bitcoin’s year-to-date returns of nearly 50% aren’t too shabby. But if you’d have invested in bitcoin two years ago, you would be sitting on a return of more than 457%. Morgan Creek Digital Co-Founder Anthony Pompliano did the back-of-the-napkin math. He proved that there’s a new sheriff in town, even in the face of the stock market’s historic bull run.

While the time period includes bitcoin’s 2017 peak, it also accounts for the crypto winter, which provides some balance. All told, the bitcoin price is up by a triple-digit percentage. Meanwhile, the Dow Jones Industrial Average has delivered, ahem, 26% returns in the same span. It’s not just the Dow. Bitcoin has outperformed the S&P 500 and oil, too, not to mention its chief rival as a store of value, gold. Even if bitcoin’s risk/reward ratio isn’t for everyone, it’s all about maintaining the right perspective.

“The non-correlated, asymmetric nature of bitcoin makes it imperative that every portfolio include some exposure to the digital currency,” said Pompliano using the hashtag “GetOffZero.”

‘Volatility Is Required for Outsized Returns’

The stock market has generated impressive returns over the last couple of years, too. But nobody ever said the Dow was going to zero as they did about bitcoin. So the fact that the leading cryptocurrency’s returns have usurped the Dow’s is all the evidence that crypto investors need to silence the critics.

Bitcoin is a volatile asset, and its performance is erratic. As Fundstrat’s Tom Lee says, bitcoin’s annual gains tend to involve the 10 best trading days of the year. The Dow, which experienced its biggest one-day point gain (not percentage) ever of 1,086 points  at year-end 2018, is boring by way of comparison. Bitcoin investors can stomach a much wilder ride. Just ask Softbank Group CEO, Masayoshi Son. The billionaire lost $130 million in a bitcoin bet gone wrong.

Pompliano said:

“Bitcoin’s volatility is what made it the best performing asset over the last decade. Volatility is a requirement for outsized returns.”

Dow, bitcoin
The Dow vs. the Grayscale Bitcoin Trust. | Source: Yahoo Finance

Getting Off Zero

The Morgan Creek Digital co-founder offers some anecdotal evidence that big investors are paying attention to bitcoin. Pompliano has observed a shift in sentiment among family offices. When asked by a follower in the Twitter thread if wealthy families are in fact “getting off zero,” he responded that “they’re getting there” and “plenty of folks are asking the right questions.”

Bitcoin’s ascension to nearly a $10 billion market cap since its inception a decade ago has impressed even the most seasoned Wall Street veterans, including Morgan Creek CEO Mark Yusko.

Click here for a real-time Dow Jones Industrial Average price chart.