Why I’ll Still Take Bitcoin Over Any Stock on The Market
Crypto is dead, long live crypto. It seems like crypto can’t catch a break as far as the public eye is concerned. There are people out there who never miss a chance to say that crypto is a “passing fad” that’s “just about over.”
Don’t get me wrong, there have been passing fads in the crypto-sphere. Who here remembers the peak non-fungible token (NFT) craze? I do, and I wish I didn’t. It was the most egregious case of missing the point of a technology. Virtually everything sold as a part of the NFT bubble was worthless and ended up that way.
So, when the NFT bubble collapsed, out came the crypto-doomsayers. They did the same thing when FTX collapsed late last year – a situation that was, granted, much more severe and scary than the NFT bubble.
None of this means crypto has collapsed though. Scams have collapsed, dirtbags have collapsed, prices of the “assets” they hawked have collapsed, but at the end of the day, this has nothing to do with the technology that makes crypto work – or its potential as an asset class.
But we’re still bombarded with media these days that treat the most recent big crypto catalyst – positive or negative – if it were the only catalyst that matters.
To understand what really matters in crypto, you have to look at this…
For Every Two Steps Back, There Are 10 Steps Forward
More than once in its history, Bitcoin (BTC) and other cryptos have lost huge amounts of value. Removed from all context, these moves look catastrophic, but when you look at the big picture, it’s nothing to panic about.
That’s because the high prices Bitcoin falls from are only so high in the first place because of gains so large that they border on ludicrous.
Let’s take our most recent example. We are in the middle of “crypto winter” after all, and there’s no denying 2022 was a tough year for the asset class, but that’s nothing to worry about as long you’re not trying to outsmart the market, or if you bought in right at the end of 2021 and then sold it a month ago.
Yes, right now Bitcoin is trading at right above $17,500. One year ago, it was above $40,000, and that wasn’t even its all-time high. Go back three years to 2020 though, and it was just over $8,000. Go back another year after that, and it was at less than $4,000. People who bought Bitcoin as recently as 2019 and 2020 are still doing outrageously well – way, way better than stock-market investors.
If we compare that to other ways we could have invested our money, it’s no comparison at all. The S&P 500 saw gains over that same time period, but it didn’t even double. The same can be said for a famous stock like Amazon.com Inc. (AMZN)
Another biggie, Microsoft Corp. (MSFT), managed to double once over those years, but not too much more than that. Compared this to the 300%-plus gains Bitcoin investors realized.
And it’s not the first time this had happened either. Before crypto recently “died,” it “died” back at the end of 2017 after reaching an all-time high just below $20,000. The thing is, the place it “collapsed” to was still more than $3,000.
Go back another three years to when that rally began in 2015, and it was less than $3,000.
As you might have guessed by now, that wasn’t even the first time it’d happened. Bitcoin broke the $1,000 mark as far back as 2013, although it didn’t stay there long. Didn’t matter; Bitcoin would still go on to become the single best-performing asset of the 2010s.
Over this timeframe, Bitcoin even demolishes Tesla Inc. (TSLA), an extremely successful stock. I’ll compare from May 1, 2013, when data for Bitcoin begins. Bitcoin grew in value by more than 100X. As for Tesla, it saw growth of less than 20X.
The overall pattern is clear: Bitcoin gains value at an incredible speed, even if it takes a bumpy ride to get there. Sometimes, it gets knocked down by 75%, but its growth is still so incredible that it still outperforms its competition when it all averages out.
These “pullbacks” still leave Bitcoin far ahead of where it ended its last bearish cycle. So, zoom the camera out – broaden your time horizon; it’s absolutely critical for serious crypto investors – ignore the gossip-slingers and panic-mongers, and keep on playing the long game.