Economists Say Bitcoin Profits Outperform Stocks in the Long Run


According to several industry executives, the recent stock and cryptocurrency market crash has provided another opportunity to observe better earnings opportunities for cryptocurrencies compared to equities.

This week the crypto market saw one of the biggest sell-offs in its history by total market cap. sudden drop More than 30% from $1.8 trillion on May 4 to $1.2 trillion on May 12. Bitcoin (BTC), the largest digital asset by market cap, fell down It fell below $27,000 for the first time since late 2020, losing 30% of its value over the same period.

However, market instability is not limited to cryptocurrencies. The stock market was also one of the worst moments since 2020. Technology-focused Nasdaq Composite dropping It has fallen more than 12% and below 12,000 points during this period.

Tech giants like Apple and Microsoft saw their market cap decrease Tesla’s market cap is around 13% Tank It increased 23% from $986 billion to $754 billion.

Since the cryptocurrency market is more volatile than stocks, it is associated with higher risk but also offers greater opportunities, ANB Investments CEO Jaime Baeza told Cointelegraph.

“I believe that cryptocurrencies as a whole offer better risk-return opportunities in the long run without going into too much detail,” Baeza said.

Lily Zhang, chief financial officer of Huobi Group, also said that the volatility of cryptocurrencies means “more opportunities to make significant profits with cryptocurrencies.”

“It’s important to note that a new cycle of Fed rate hikes is underway, and both cryptocurrencies and tech stocks could experience rapid capital outflows,” Zhang said.

Cryptocurrency has a higher beta market sentiment than the stock market, according to crypto economist Ryan Shea at fintech startup Trakx.io. When investors are more reluctant to take risks, the market experiences a relatively larger price decline, but an improved risk appetite means a larger price rise, Shea added.

“Our long-term view is that certain crypto assets, such as fixed or limited supply cryptocurrencies such as Bitcoin, will experience better price appreciation as they offer a better store of value compared to fiat currencies.”

According to Huobi’s CFO, the correlation between the cryptocurrency market and the US stock market has been strong since the end of 2020. The correlation between Bitcoin and the S&P 500 was as high as 0.7 in January and has remained high since then, she added.

RELATED: Bitcoin’s bumpy road to becoming a risk-averse asset: Analyst research

“Given this correlation, it is difficult to hedge the overall portfolio price volatility when assets are allocated to both equity and crypto assets. However, investors can mitigate volatility by controlling risky asset positions and adjusting both their asset allocation strategy and the diversity of assets they invest within these two asset classes,” said Zhang.

As of this writing, the cryptocurrency market is showing a significant recovery, with Bitcoin gaining around 9% in the last 24 hours. transaction According to data from CoinGecko, it is $30,610. Cryptocurrencies are down 23% in the last 30 days.

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