The Bitcoin price surge over the past few years has attracted investors, usually leaving behind traditional assets like bonds, stocks, and gold. While nobody can deny its unbeatable gains, you must understand its performance in comparison to the old financial instruments that lie in key factors such as correlation, volatility, and core drivers.
Eager to learn? Then this blog will jump into the details, and you will get an idea of why Bitcoin’s performance is roaring.
The Growth of Bitcoin
Bitcoin’s growth has been unmatched in financial history since the concept was founded. Over the past decade, as well, the cryptocurrency master has delivered extraordinary returns to its investors, often beating the S&P 500 by big margins. For instance, some analyses display the compound annual growth rate for surpassing the growth of S&P, with total returns reaching thousands of percentage points over longer time durations. This astounding boost is a primary reason why BTC looks more enchanting to retailers and investors from institutions seeking high returns, which traditional assets have failed to give.
Volatility
The Bitcoin price can be extremely volatile, meaning that, unlike stocks and bonds, which experience moderate price movements, BTC witnesses double-digit percentage rises within hours. This kind of intense fluctuation unlocks immense opportunities for huge returns and even risks for heavy losses.
While professional traders are used to its swinging values, newbies might find it discouraging, but as this matures and gains wider acceptance, some data reports that the volatility factor has started to temper, though it still secures a higher rank than most old-school assets.
Correlation with Traditional Markets
In the beginning, BTC was sold as a portfolio diversifier because of its low correlation with traditional assets. The idea was that it would move without the assistance of stocks and bonds, offering a hedge when the market was down. However, recent trends show an increasing correlation with high-growth tech-related stocks and the broader S&P 500. This tells that macroeconomic factors such as interest rates and hunger for investing risk impact the Bitcoin price. It still offers a few diversification advantages, but is no longer a standalone asset.
The “Digital Gold” Narrative
This “digital gild” narrative has garnered traction, specifically during inflation. Proponents date that BTC’s fixed supply of twenty-one million coins makes it a rare asset, like gold, which also soars during these times. However, Bitcoin’s performance in this inflationary situation has been inconsistent, making it a less reliable asset compared to traditional securities.
If you want to stay updated with the Bitcoin price, then explore ByBit. The platform gives live fluctuation.
Frequently Asked Questions
How does Bitcoin’s volatility compare to traditional stocks?
Bitcoin is significantly more volatile than most traditional stocks and bonds, experiencing much larger price swings.
What factors contribute to Bitcoin’s price movements?
Supply and demand, macroeconomic factors like interest rates and inflation, and regulatory changes.
