Bitcoin’s volatility, with its significant sell-off in 2022, is closely tied to the macroeconomic environment and high inflation, which has also impacted traditional asset classes such as stocks. Despite this, the asset has shown astronomical returns from a long-term perspective, outperforming other asset classes.
Data from the Finbold ROI tool shows that the five-year return on bitcoin investments outperformed the top five bank stocks by an average of 549.35%. Specifically, the cryptocurrency has the highest return relative to Wells Fargo at 839.17% and to Citi at 728.34%.
Bitcoin’s return relative to Goldman Sach was 407.46%, followed by JPMorgan with 402.06%. Bank of America is in fifth place among the top five bank stocks, with bitcoin yielding 369.75% higher. The percentages show how much a five-year investment in BTC outperforms the return on investment in traditional bank stocks.
It is important to note that BTC and listed stocks belong to different asset classes. Stocks have an underlying company with assets, and their success depends largely on the performance of the bank. In contrast, bitcoin is not backed by any solid assets, and the price is influenced by speculation caused by market sentiment.
And such figures can be considered a surprise, as the flagship cryptocurrency is struggling with financial institutions that have been around for decades, and the asset is just over a decade old.
After the unprecedented growth of bitcoin, certain well-known banks were forced to use cryptocurrencies as a growth strategy at the same time as they entered the digital asset market. Now large banks like Citi are building teams focused on cryptocurrencies and basic blockchain technology.
Depending on how the regulatory aspect develops, some banks may allow customers to invest directly in bitcoin. In this case, both parties would benefit, as the value of their shares would increase and bitcoin would benefit from the institutional contribution.
Although bitcoin is a volatile asset, many equity investors include it in their portfolios. This is partly due to the ability of cryptocurrencies to deliver exponential returns over a short period of time.