Bitcoin, Gold, Real Estate or Stocks?

As finance is now globalised, the debate rages about which investment gives the greatest return. Investors all over the world are struggling with the question: Bitcoin, gold, real estate or stocks? Let’s explore each investment type’s historical performance and future potential, starting with Bitcoin.

Bitcoin

Many investors consider Bitcoin a revolutionary investment, some even refer to it as “digital gold.” Although it has been volatile over the years, Bitcoin (BTC) has seen tremendous growth since its inception in 2009. BTC value has risen to an all-time high of nearly $65,000 in April 2021. However, since then, its price has fallen more than 70 % from ATH, raising questions about its future potential.

Despite the recent decline, investors like Michael Saylor of MicroStrategy remain ultra-bullish on Bitcoin. Saylor argues that BTC is the best investment because of its scarcity and utility. However, not everyone is convinced, and Saylor has faced criticism for investing so much of the company’s money in Bitcoin.

Gold

Gold has been a reliable investment valued for its value and stability for centuries. It has stood the test of time and remains a popular investment option for those looking for a safe haven in uncertain times. Gold has seen significant growth over the years, and its value has increased almost fivefold in the last two decades.

However, not everyone is convinced. “Gold Fallacy” as Peter Schiff claims that gold is the only true safe-haven investment, dismissing Bitcoin as a speculative asset. Meanwhile, others such as Michael Saylor and Max Keizer believe that Bitcoin will eventually replace gold as the safe-haven investment due to its limited supply and superior technological capabilities.

Property

Property has long been a popular investment option. Many investors see it as a way to generate passive income and build wealth over time. While it has seen its ups and downs over the years, real estate has been a reliable investment. Historically, property values ​​have increased steadily over time.

However, real estate can be risky because it depends on economic conditions and local market comparisons. The recent pandemic has highlighted the risks of real estate investment, with many commercial properties facing significant challenges due to the shift to remote working.

Stock

Finally, shares have been a good investment for many, with the potential for significant growth and returns over time. With the rise of technology, investing in stocks has become more accessible to retail investors, with many platforms offering commission-free trading.

Although stocks have seen significant growth over the years, they can be highly volatile, with sudden market crashes causing significant losses for investors. Also, not all stocks are created equal, with some companies experiencing significant growth while others struggle to stay afloat.

Over the years, there has been a growing interest in the relationship between Bitcoin and traditional investments such as the stock market. While some investors see Bitcoin as an alternative asset, others see it as a supplement to their existing investment portfolio.

Let’s take a closer look at how Bitcoin has performed on average against the stock market, specifically the S&P 500 and the NASDAQ.

Bitcoin vs. stock

Historically, Bitcoin has been uncorrelated with the stock market. However, in recent years there has been an increasing correlation between Bitcoin and the stock market, especially during times of economic uncertainty. And yes, we are in uncertain times now.

When the stock market experiences significant losses, investors may turn to alternative assets such as Bitcoin as a hedge against inflation and market volatility. This was evident during the COVID-19 pandemic, where Bitcoin saw significant growth as the stock market experienced significant declines.

Bitcoin vs. S&P 500

Considered one of the most accurate measures of stock market performance, the S&P 500 represents the top 500 publicly traded companies in the United States. Historically, Bitcoin and the S&P 500 have been uncorrelated, but there has been an increasing correlation between the two in recent years.

Bitcoin and NASDAQ

The NASDAQ is an index that tracks the performance of over 3,000 technology companies, including some of the world’s most significant technology giants such as Apple, Amazon and Google. Historically, Bitcoin has been more correlated with the NASDAQ than with the S&P 500.

In a similar study, Bloomberg showed that the correlation between Bitcoin and the NASDAQ was 0.51 over the past year, indicating a moderately positive relationship between the two. This is likely due to Bitcoin’s status as a digital asset that relies heavily on technology and its growing adoption by tech companies.

Diversify

While Bitcoin and traditional investments such as the stock market have historically been uncorrelated, there has been one is growing connection between the two in recent years. Although still relatively low, it highlights the importance of diversifying your investment portfolio to include alternative assets such as Bitcoin.

Investors considering investing in Bitcoin should consider the risks and potential rewards of this young asset class. And its increasing correlation with the stock market.

Ultimately, the best investment is one that aligns with your financial goals and investment strategy. Whether you choose Bitcoin, gold, real estate or stocks, the key to success is staying informed, patient and invested for the long term.