Bitcoin’s 2024 Return Against Equities

Bitcoin fared quite well in 2024 against traditional assets like bonds, gold, real estate, and the equity market as a whole. But how does it compare to individual stocks? This matters for stock pickers, and for framing Bitcoin in terms of other major technological movements in the economy.

Bitcoin had an annual 2024 return of 114%. The return and volatility are both much higher than the asset classes of bonds, real estate, gold, and the entire equity market. However, the risk-adjusted winner of 2024 was Palantir (PLTR), which captured a return of 353% and a slightly higher volatility than BTC. MicroStrategy (MSTR) came in close second, finishing out at a return of 338%, but at a much higher volatility. MicroStrategy would have handily beaten PLTR in November when its return YTD was 497%, but MSTR shed much value in the last six weeks of the year from aggressive bitcoin buying, powered by equity dilution.

Even Nvidia (NVDA) offered a higher risk and return, with an annual return in 2024 of 187%. The major tech companies (Apple, Microsoft, Amazon, and Meta) all offered lower risk and lower returns to Bitcoin. You can see that Bitcoin generally sits on the capital market line of risk and return, with MicroStrategy on one end and government bonds (GOVT) on the other. PLTR is an outlier, but so are companies like Tesla, Coinbase, and Marathon, which all offered lower returns and greater risk. Even the BlackRock Bitcoin ETF (IBIT) roughly matched Bitcoin’s return, but it was more volatile.

Now, let’s take a look at a broader universe of equities. Let’s sample the companies in the S&P 500 above a $10 billion market cap. A random sample of these companies on the risk and return chart looks like:

Again, notice the pattern. Some companies have higher returns than Bitcoin in 2024, but also higher risk, like Nvidia and Palantir. Other companies have less return and less risk, like Disney and Nike. Some are strictly worse, with greater risk but lower return, like Tesla and Micron Technology.

There was one company in the S&P 500 that offered a better deal than Bitcoin, with lower risk and greater return. To find it, here’s a sample of the companies from the S&P 500 without the $10 billion minimal market capitalization threshold:

Here you can see that Sea Limited had an annual return of almost 200%, and a volatility just shy of Bitcoin’s. Have you heard of Sea Limited? Neither have I. So, indeed there may be a better investment than Bitcoin in any one year. But the chances of finding this one company among 500 is small. This proves my point that Bitcoin really is an asset class, not just another single investment. And its risk and return should be compared to other asset classes, not just to other single stocks.