Bitcoin Outperforms Tech Stocks by 12%, But Can It Continue to?
Bitcoin’s numerous comparisons with the traditional market assets have stemmed from the former’s relatively high ROIs through the years, and rightly so.
Recently, a Finbold report presented that as of 13 February 2022, Bitcoin had outperformed the top six tech stocks by an average return on investment (ROI) of 12.24%.
Bitcoin Leading the ROI Race
Bitcoin is down 38.57% from its all-time high price of $69K made in November 2021, however, the top cryptocurrency seemed to steal the show, still. Data highlighted that BTC significantly outperformed Meta by 46.74%, followed by Tesla at 18.37%. Furthermore, the top coin also outperformed Amazon by 3.78%, followed by Alphabet at 1.84%.
In comparison to the American multinational technology corporation, Microsoft Bitcoin’s ROI was 1.95% higher. Additionally, the king crypto’s ROI almost matched Apple’s surpassing the stock by 0.76%.
That said, at press time BTC’s yearly ROI vs USD was -13.19%, notably Bitcoin’s price drawdown after the fall from ATH has affected Bitcoin’s generally high ROI track.
But that isn’t all, another factor that seemed to worry Bitcoiners was the top coin’s rising correlation with the two major indices—the S&P 500 and Nasdaq. Historically, Bitcoin has had a relatively low correlation to traditional asset classes, however, since last year, the same has been on the rise.
Rising Correlation, Diminishing Returns
Bitcoin’s trajectory after the September-November recovery last year made the top cryptocurrency one of the leading investment products with returns of about 60%.
While BTC’s ROI over the longer time frame has been higher than tech stocks, the two investment products have moved in tandem over the last year.
It can be argued that the higher correlation points to the impact of interest rates and inflation concerns that have affected both the stocks and the crypto market. That said, the maturing Bitcoin market and BTC’s developing narrative as an asset class could have also propelled the higher correlation.
Despite the relatively higher ROI, BTC’s ROI vas USD over the last year has diminished. Furthermore, higher volatility and increased correlation with traditional assets could play a spoilsport for the top coin.
Notably, over the last couple of months, volatility has affected both Bitcoin and traditional assets equally, amid worries of a potential interest hike and tapering measures by the Federal Reserve.
At press time, Bitcoin traded at $42,047.10 noting 0.87% price losses in 24-hours while the coin was down 1.31% by the week.