Bitcoin Will Continue to Outperform Traditional Assets, Says Bloomberg

Bitcoin Will Continue to Outperform Traditional Assets, Says Bloomberg
Key facts:
  • In the last two and a half years, the return of cryptocurrencies has grown 374 times.

  • Commodities have grown 59 times in earnings and bonds have fallen 10 times.

Bloomberg Intelligence notes today that in the decade beginning with 2020, bitcoin and cryptocurrencies will continue to outperform commodities, Nasdaq-listed stocks, and US Treasury bills.

In a tweet Published this Monday, Bloomberg shows that the Bloomberg Galaxy Crypto Index (BGCI), a weighted index that includes bitcoin and five other cryptocurrencies, It has returns seven times higher than the traditional assets mentioned two years ago.

This notable advantage of bitcoin (BTC) and other cryptocurrencies as an investment vehicle occurs at a time when the BGCI index has fallen 71%, compared to its all-time high in November 2021.

The BGCI is made up of the following cryptocurrencies: bitcoin (30%), Ethereum (ETH, 30%), XRP (XRP, 18.58%), bitcoin cash (BCH, 9.34%), litecoin (LTC, 6, 63%) and EOS (EOS, 5.45%).

The chart below shows the BGCI (white) contrasted with the return of the Bloomberg Commodity Index (light blue), the Nasdaq 100 Index (yellow) and the Bloomberg US Treasury Bond Return Index.

Bitcoin performance against three traditional assets. Source: Bloomberg.

The commodities index includes energy (30.43%), grains (22.44%), industrial metals (17.53%) and precious metals (15.62%), among others. The Bloomberg Nasdaq Composite Index, on the other hand, contemplates a change in the weighting of the Nasdaq 100 stocks, in which technology stocks have a weighting factor of 51%, consumer services 16%, health 7.7% and the financial sector 7.4%.

All the variables mentioned are placed at the same starting point, at the beginning of 2020, so that their relative growth can be compared. The superiority of cryptocurrency returns is notorious in the last 29 monthsexcept for a brief period between March and May 2020, when the Covid-19 pandemic was declared.

Read:  Twitter Adds Tipping Feature to Ethereum

In April and November 2021, the highest peaks in cryptocurrency performance occur, in which the BGCI showed increases of up to 1,300 times compared to January 1, 2020.

When traditional assets are considered, commodities grew 59 times in the indicated period, while the 100 companies grouped in the Nasdaq index show a joint growth of 42 times. In contrast, the Bloomberg index of US treasury bonds is the only one that shows losses of ten times its value at the beginning of 2020.

Although the current bear season started in November 2021, that year closed with bitcoin returns of 60%which doubled the performance of traditional assets, as reported by CriptoNoticias.

Bitcoin Will Continue to Outperform Traditional Assets, Says Bloomberg
Bitcoin is above traditional assets and sectors. Source: Bloomberg.

In this Bloomberg chart, commented by CriptoNoticias, the evolution of bitcoin returns is compared against a large group of sectors such as energy, bonds, and the S&P 500. It can also be seen there that bitcoin outperforms a vast majority of conventional assets.

Since the beginning of last year, the price of bitcoin shows a growing correlation with traditional assets, as reported in this medium. Recently, the correlation of the price of bitcoin with the Nasdaq index has increased. While with the S&P 500 bitcoin index it shows a correlation of 0.52, with Nasdaq that coupling goes up to 0.82. This implies a greater sensitivity of bitcoin to variations in the latter.

Within the downward trend of its price, bitcoin has stabilized in recent days around USD 29,000, after a rebound in purchases. At the time of writing this article, the BTC price is USD 29,738, according to the CriptoNoticias price index.