- According to data from Goldman Sachs, Bitcoin has outperformed traditional investment assets and sectors in year-to-date returns and risk-adjusted performance, gaining an impressive 51% in YTD absolute returns.
- In contrast, energy and crude oil have experienced declines of 11% and 14%, respectively, with oil prices dropping to their lowest level since December 2021 due to weaker fundamentals and broader market concerns.
- Bitcoin’s recent surge in price has been attributed to the growing likelihood of the US Federal Reserve abandoning its hawkish monetary policy, and despite warnings of a possible correction, the cryptocurrency has rebounded stronger than stocks from Wall Street.
- The recent rally in the crypto market, led by Bitcoin’s gains amidst the ongoing banking crisis, indicates a shift in the narrative surrounding the cryptocurrency, although its value remains heavily influenced by inflation rates and Federal Reserve decisions on interest rates.
Recent data from Goldman Sachs shows that Bitcoin has surpassed traditional investment assets and sectors, including technology and gold, in year-to-date (YTD) absolute returns and risk-adjusted performance. As of now, the leading cryptocurrency has gained an impressive 51% in YTD absolute returns.
Goldman Sachs out highlighting #bitcoin as the best performing asset year-to-date. pic.twitter.com/I0qoELfIMs
— ◢ J◎e McCann (@joemccann) March 19, 2023
Bitcoin is performing better than traditional assets
This is in stark contrast to other sectors such as information technology, communication services, and consumer discretionary, which have respectively achieved YTD returns of 16%, 15%, and 11%. Additionally, Bitcoin has also outperformed Russell 1000 Growth (+10%), gold (+4%), and the S&P 500 (+4%), cementing its position as a top-performing asset class in the current market.
In contrast, energy and crude oil have experienced notable declines of 11% and 14%, respectively. The price of oil has plummeted to its lowest point since December 2021, primarily due to weaker fundamentals and broader market concerns. This downward trend underscores the challenges faced by traditional energy markets, particularly in light of the current economic landscape.
The future of the market is highly contingent on decisions made by OPEC+ and the United States. When it comes to risk-adjusted returns, as measured by the Sharpe Ratio, Bitcoin has consistently displayed strong performance with a score of 1.9. This surpasses other major sectors such as information technology (1.5), Nasdaq (1.4), and even healthcare (-1.1).
The recent surge in Bitcoin’s price has been largely attributed to the increasing likelihood of the US Federal Reserve eventually abandoning its hawkish monetary policy. Since the shutdown of Silicon Valley Bank on March 10, the cryptocurrency has experienced a significant 35% increase. Despite market analysts’ warnings of a potential correction, Bitcoin’s rebound has been more robust than that of Wall Street stocks, capturing the attention of many investors.
In 2022, investor confidence in cryptocurrencies was heavily impacted by the collapse of Terra, FTX, and Celsis 3AC, as well as the global monetary tightening. Bitcoin was no exception, experiencing a significant correction in value. However, the week ended on a positive note for Bitcoin with a 34% gain, marking the largest increase since January 2021. This indicates a notable shift in the narrative surrounding the world’s leading cryptocurrency amidst the ongoing banking crisis.
The recent rally in the crypto market has been a welcomed relief for investors who have faced a challenging bear market. Many are suggesting that there may be a change in how Bitcoin is perceived by the broader financial community. Nevertheless, it is important to note that the value of Bitcoin is still heavily influenced by inflation rates and decisions made by the Federal Reserve regarding interest rates. These factors will continue to play a crucial role in shaping the future of the cryptocurrency market.
According to Tradingview, Bitcoin is trading at $27943.00 at the time of writing.