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Author: Admin | 2025-04-28
Persistent lack of correlation to traditional assets over long periods of time, make it an attractive asset in which to invest generational wealth.[3][4] Bitcoin’s historical returnsBitcoin launched in January 2009 but did not price until July 2010 when it began to change hands at $0.05 per bitcoin. Since that time, bitcoin’s returns have consistently and significantly outperformed traditional assets such as gold and equities.Figure 1: Compounded Annual Returns of Bitcoin, Gold, and Equities [5] To avoid “cherry picking” a favorable point in time for bitcoin’s performance, we calculated 3-year annualized returns rolling over time. Here we also introduce a hypothetical investment portfolio comprised of 60% equity and 40% fixed income securities ("60/40 portfolio"). This portfolio represents a traditional diversified investment portfolio against which we can compare bitcoin's performance.As Figure 2 illustrates, 3-year annualized returns of bitcoin significantly outperformed the 60/40 portfolio over time. The median of bitcoin’s 3-year annualized returns was 111.5% compared to just 9.3% for the 60/40 portfolio. In addition, bitcoin's returns exceeded those of the 60/40 portfolio during 99.3% of the observed periods.Figure 2: Rolling 3-Year Annualized Returns of Bitcoin vs. 60/40 Portfolio [6] We then recalculated 60/40 portfolio returns assuming incremental investments in bitcoin. We began with a 60/40 portfolio and added 10 basis point increments of bitcoin, maintaining a 60/40 split for the remaining balance. With each portfolio, we calculated 3-, 5-, and 10-year annualized returns to understand the impact that a range of allocations to bitcoin would have across different time horizons. As Figure 3 illustrates, even small allocations to bitcoin increased 3-, 5-, and 10-year returns dramatically. In fact, just a 5% position in bitcoin doubled the 10-year returns of a 60/40 portfolio.Figure 3: Annualized Portfolio Returns with 0-10% Allocations to BitcoinWhat about volatility?Bitcoin's impact on portfolio returns is not surprising given its
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