Bitcoin Returns vs. Major Asset Classes

Bitcoin had an average annual return of 230% in the 10 years between March 2011 and 2021, showing that, despite its volatility, it's a top-performing asset class.

Visual Capitalist recently discussed with Franklin Templeton Bitcoin's historical returns and compares them to other major asset classes.

Bitcoin vs. Hot Assets

One way to measure risk-adjusted returns is to use the Sharpe ratio, which describes an investment’s excess return relative to its volatility.

Therefore, the higher the Sharpe ratio, the better the risk-adjusted return. A Sharpe ratio of 3 or above would translate into "excellent" risk-adjusted returns, while a Sharpe ratio below 1 would be "suboptimal."

Despite the risk and volatility, Bitcoin’s returns have been positive in 1, 5 and 10 years.

Bitcoin vs. Tech Stocks

Tech stocks like Google and Microsoft are often used as examples of assets with high risk-adjusted returns. However, Bitcoin has also been highly rewarding and has provided higher risk-adjusted returns than most tech stocks over the past year.

Invest in Bitcoin Easily

Bitcoin and other emerging digital assets have shown that they can offer attractive risk premiums for investors willing to tolerate large swings over the long term, especially when compared to other major assets.

In the second part of the Bitcoin demystification series, we explore what opportunities the Bitcoin halving may present for investors.

Learn more about the exciting world of digital assets with Franklin Templeton

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