Bitcoin’s Worst Return Compared To The Best Of Other Assets

How does Bitcoin’s worst return compare to the best return of other assets?

Last month I compared Bitcoin’s worst return to the worst return of other assets and stocks. You may feel that is not a fair comparison. So, let’s stack the deck against Bitcoin and see how it does. How does Bitcoin’s worst return compare to the best possible return from other assets?

To compute this, we need to calculate the best possible return for any holding period. Looking backward from 2011 through 2023, this is the best trade for every possible holding period, namely, buying at the lowest possible price and selling at the highest possible price. Then I compute that for every possible holding period. Doing so for the other asset classes like equities, gold, real estate, and bonds gives a comparison of the worst of Bitcoin against the best of these other assets:

First, observe that all the best returns are declining in the holding period. That’s because of short-term volatility in the early years, which can lead to outsized returns. Over time, those returns converge to their equilibrium levels. Most importantly, the variations in the best returns are near zero compared to Bitcoin. And after six years, Bitcoin’s worst return eclipses the best return from all other assets.

What about Big Tech?

As before, the top growth stocks fare better against Bitcoin, with Tesla leading the pack in the early years, and Nvidia and Tesla neck and neck for the long horizon. Now, Bitcoin still beats these stocks, but it takes longer, almost 11 years for the worst Bitcoin return to exceed the best of Tesla or Nvidia. Comparing this to a broader universe of top 9 stocks yields a similar story, which you can see below:

What’s the lesson here? Holding period matters!