Bitcoin’s last 5 years ROI is 70x higher than average return of five major indices
By Justinas Baltrusaitis
Over the last few years, the stock market alongside cryptocurrencies have offered investors an opportunity to grow their money, however, the perfect option relies on the Return of Investment (ROI) value. Despite the uncertainty around cryptocurrencies, Bitcoin has surpassed expectations to register one of the highest ROI compared to traditional players.
Data gathered by Buyshares.co.uk shows that over the last five years between June 26, 2015, and June 26, 2020, Bitcoin’s ROI was 70.16 times higher compared to the average of five major indices. The major indices reviewed in our research include NASDAQ, S&P 500, Dow Jones, NIKKEI, and FTSE 100. During the period under review, Bitcoin’s ROI stood at 3,456.98% where in June 2015, the price of Bitcoin was $257.06 and by June 26th this year, the price rose to $9,143.58. On the other hand, the average ROI for the highlighted indices was 49.27%.
The NASDAQ index had the highest Return of Investment at 96.77% with 4,958.47 points five years ago while on June 26th this year, it stood at 9,757.22 points. The S&P 500 had the second-highest ROI at 46.23% with 2,057.64 points five years ago, while in 2020 it stood at 3,009.05 points. In the third slot, there is the Dow Jones index with an ROI of 42.16%. On June 26th, 2015, the American index had 17,596.35 points, which later increased to 25,015.55 five years later. Japan’s NIKKEI is in the fourth spot at 11.94%, where on June 26, 2020, it had points standing at 22,512.08 while five years ago, it was 20,109.95. FTSE 100 is the only index with negative returns at -6.96%. On June 26th, 2015 it had a value of 6,620.48 points which later dropped to 6,159.30 on a similar date this year.
Buyshares.co.uk’s research also compared the Return of Investment between Bitcoin and the major indices based on Year-to-Date statistics. Bitcoin had the highest ROI at 28.71%. NASDAQ had the second ROI of 8.74%, to emerge as the only index with a positive return between January 1st and June 26 this year.
NIKKEI’s returns stood at -4.83% followed by S&P 500 with a Return of Investment at -6%. On the other hand, Dow Jones had the fourth highest returns at -12.34%. Lastly, FTSE 100 (FTSE) had the worst ROI at -18.33%.
Explaining Bitcoin’s high ROI
Return of investment refers to a financial metric that is mostly used to determine the probability of gaining a profit from an investment. The ROI which is expressed in percentages compares the gain or loss from an investment relative to its cost. This metric is important as it helps in evaluating the potential return from a stand-alone investment.
Over the years, Bitcoin has been growing in popularity, and the maiden cryptocurrency status has largely contributed to the high return of investment. Bitcoin’s returns are significant despite the perennial fact investing in cryptocurrencies involves substantial risk of loss. The valuation of cryptocurrencies largely fluctuates, and, as a result, investors may lose more than their original investment.
Notably, five years ago, Bitcoin was still growing in popularity but it faced a lot of resistance due to the regulation issue. Bitcoin crusaders are pushing for it to be adopted in the mainstream. The rising value of the asset can be tied to improved regulations in different jurisdictions. Most people joined the Bitcoin wagon after the December 2017 all-time high of $20,000 which later crashed to about $3,500 a few months later.
With coronavirus pandemic that led to the traditional market crash, many view Bitcoin as an alternative store of wealth. Bitcoin fans consider the pandemic as the catalyst for elevating the cryptocurrency to the digital gold.
Indices crash in the wake of coronavirus
Notably, most of the five indices have been rising over the years, before crashing in 2020 as a result of the COVID-19 pandemic. Due to the crisis, there were rising fears and global economic shutdown directly impacting the indices.
The crash began towards the end of February 2020. It is worth mentioning that before the crash, the Dow Jones Industrial Average, the NASDAQ Composite, and the S&P 500 Index all finished at record highs continuing the upward trajectory witnessed in the last five years. On February 19, this year the NASDAQ and S&P 500 even reached subsequent record highs before all stocks began plunging in the following weeks.