Bitcoin’s Worst Return Eclipses the Best Return from All Other Assets After Six Years

Last month I compared Bitcoin's worst return to the worst return of other assets and stocks. You may feel that is not a fair comparison.

Bitcoin's worst return easily beats the best return of other assets, stocks, and even Big Tech over any holding period.

Last month, I showed that Bitcoin's worst return easily beats the worst return of other assets and stocks. But some people might argue that this isn't a fair comparison because it pits Bitcoin's worst against the other assets' best.

So let's stack the deck against Bitcoin and see how it does. We'll compare Bitcoin's worst return to the best possible return from other assets.

To calculate this, I need to find the best possible trade for any holding period. Looking backward from 2011 through 2023, here's the best trade for every possible holding period: Buy at the lowest possible price and sell at the highest possible price. Then I compute that for every possible holding period.

Doing so for the other asset classes (equities, gold, real estate, and bonds) gives a comparison of the worst of Bitcoin against the best of these other assets:

Worst Bitcoin vs. Best Other Assets

First, observe that all the best returns are declining in the holding period. That's because of short-term volatility in the early years, which can lead to outsized returns. Over time, those returns converge to their equilibrium levels.

Most importantly, the variations in the best returns are near zero compared to Bitcoin. And after six years, Bitcoin's worst return eclipses the best return from all other assets.

What about Big Tech?

Worst Bitcoin vs. Best Big Tech

As before, the top growth stocks fare better against Bitcoin, with Tesla leading the pack in the early years, and Nvidia and Tesla neck and neck for the long horizon. Now, Bitcoin still beats these stocks, but it takes longer, almost 11 years for the worst Bitcoin return to exceed the best of Tesla or Nvidia.

Comparing this to a broader universe of top nine stocks yields a similar story:

Worst Bitcoin vs. Best Top Stocks

What’s the lesson here? Holding period matters!