1. Impressive Historical Performance
Investors typically seek assets with a good performance history. Bitcoin is infamous for its volatility, however, the digital asset has still managed to be the best-performing asset class for 8 out of the past 11 years.
Bitcoin's historical returns for various holding periods (as of December 31, 2023):
1 year: 156.62% return
3 years: 50.00% return
5 years: 999.77% return
7 years: 5,147.10% return
10 years: 6,172.12% return
2. Store of Value: Digital Gold
Bitcoin's allure as a store of value comes from the fundamental economic concept of supply and demand. Unlike fiat currencies, Bitcoin has a fixed supply of 21 million coins. This scarcity is similar to that of precious metals like gold, which is often considered a long-term store of value. As a result, Bitcoin has become a digital alternative to traditional safe-haven assets. This means that Bitcoin may be a good option for investors looking to hedge against inflation, preserve wealth, and diversify their portfolio.
3. Follow the Leaders
Bitcoin interest among institutional investors continues to increase. Asset managers and endowments are recognizing Bitcoin’s potential as a store of value and as an uncorrelated asset with the potential to hedge against inflation. Nearly $50B worth of Bitcoin is now held by nations, ETFs, public companies, and private companies. Furthermore, the new approval of spot Bitcoin ETFs should only add to the demand for Bitcoin.
Chart: Vaneck