1% Bitcoin, 99% Cash Portfolio Beat S&P 500 Over Past Decade
Since Bitcoin (BTC) began to stumble in 2018, many of the crypto space’s cynics lambasted investors of this asset class for making poor investing decisions. While such criticism may be warranted for 90% of all BTC holders, there has been a select set of “OGs” that have managed to beat the bear, even surpassing gains posted by traditional equities.
Case in point, according to data compiled by PlanB, a leading Bitcoin zealot & crusader, a mere 1% into BTC and 99% cash portfolio beat the S&P 500 over the last ten years — widely deemed the index’s most prominent bull run in history. While the former out beat out the latter by a mere margin (a few % at best), the fact remains that in PlanB’s eyes, BTC has a better risk/return ratio, even though the cryptocurrency has been through drastic downturns multiple times.
Anthony “Pomp” Pompliano, the founder of Morgan Creek Digital Assets, echoed PlanB’s astute observation, even quipping that he expects for cryptocurrencies to outperform stocks for the next ten years as well.
Holding 99% cash and 1% Bitcoin over the last 10 years was a better investment than investing in the greatest stock market bull run in history.
Crypto will outperform stocks for next 10 years too. https://t.co/KPVr4ymN4X
— Pomp 🌪 (@APompliano) February 3, 2019
Pomp’s most recent comment regarding cryptocurrencies’ decade-long performance comes after Mark Yusko, his boss and co-worker, took to CNBC’s “Power Lunch” show in December to touch on a similar subject matter.
Discussing the nascency of the crypto “technological wave,” Yusko noted that the market surrounding this ecosystem is evidently volatile, as BTC and other promising digital assets are ostensibly in a so-called “price discovery” phase. Yet, Yusko then indicated that he sees a considerable upside, by stating that he expects for cryptocurrencies to become the backbone of imminent technological infrastructures, just like Google’s Android or Apple’s iOS today. Accentuating his firm’s imperishable enamorment with cryptocurrencies, Yusko subsequently remarked that he reckons cryptocurrencies, such as Bitcoin, will post “great returns,” especially from a long-term point of view.
While the Morgan Creek heads seem adamant that cryptocurrencies will outperform traditional U.S.-based equities in the coming decade, Pomp recently noted that he expects for BTC and its altcoin brethren to fall to lower lows in the coming months. Per previous reports from Ethereum World News, Pomp noted that while the frothy conditions of 2017’s Bitcoin market calmed drastically over 2018, there is still some froth that is persisting. The former Facebook employee even remarked that as it stands, there are still unreasonable expectations in this sector, along with blockchain-focused projects that shouldn’t be as valued as high as they are today.
The “Bitcoin Has An Asymmetric Risk-Return Profile” Argument
All this sentiment regarding crypto’s upside potential boils down to the argument that Bitcoin has an asymmetric risk-return profile. For those who missed the memo, this means that theoretically, a lot more money can be made from BTC going up, than it going down.
Pompliano acknowledged this himself, mentioning the asset’s asymmetric risk profile multiple times on a number of interviews. But he isn’t the only one touting their investment thesis. Alistair Milne, a Monte Carlo-based, crypto-friendly entrepreneur, recently stated that that earliest investors in BTC used to speculate that the asset was an “asymmetric investment opportunity.”
Now, Bitcoin’s asymmetry has become a reality, not just a quixotic dream. Milne explained that now that there’s more regulatory certainty/clarity surrounding cryptocurrencies, coupled with the fact that BTC has tumbled by upwards of 80% from its all-time high, “the asymmetric opportunity is absolutely explicit.”
More specifically, likely referring to the dichotomy between crypto analysts’ forecasts, the Digital Currency Fund C-suite member noted that BTC may continue to drop “and/or eventually retest its all-time high… at a minimum.”
He explained that each wave of adoption, with 2017 being the most recent, is an “order of magnitude bigger than the last.” As such, if crypto asset valuations start to run again, the increased number of consumers, coupled with exponentially increasing “price expectations of “HODL’ers,” will push BTC above and beyond $20,000.