As we approach the mid-year mark of 2024, it is evident that Bitcoin and Ethereum have emerged as the top-performing assets in the financial market. Surpassing traditional investments such as the Nasdaq, S&P 500, oil, gold, the U.S. dollar, and government bonds, these cryptocurrencies have shown impressive growth and profitability. Matrixport highlighted in a recent post that Ethereum and Bitcoin are once again leading the way among other asset classes as we enter the third quarter of the year.
One of the key factors contributing to Bitcoin’s success in 2024 was the approval of spot Bitcoin ETFs in January. This move eliminated any excuses for asset managers to exclude Bitcoin from their portfolios, ultimately solidifying its position as the best-performing asset of the year so far. Philippe Meyer from BBVA emphasized during a panel discussion that introducing a small percentage of digital assets like Bitcoin or Ether significantly enhances the performance of investment portfolios. Adding just 3% to 5% of crypto assets to a portfolio can make a substantial difference according to Meyer.
Matrixport’s analysis reveals that Bitcoin’s price has significantly outpaced the S&P 500 in 2024. With a YTD surge of over 46%, Bitcoin has outperformed the S&P 500’s 15% rise by more than three times. Cathie Wood’s ARK Invest also highlighted in their Big Ideas report for 2024 that Bitcoin’s annualized returns over the past seven years were 44%, compared to the average 5.7% return of other major asset classes. Excluding the downturn in 2022, Bitcoin’s performance between 2011 and 2021 was unmatched, delivering annualized returns of 230%, compared to the S&P 500’s 14%.
Given Bitcoin’s exceptional performance in 2023, where it increased in value by over 150%, the optimal allocation for Bitcoin has now increased to 19.4%. This indicates a growing confidence in Bitcoin as a valuable asset for investment portfolios. As we look towards the second half of 2024, it will be interesting to see how Bitcoin and Ethereum continue to perform and whether they can maintain their position as the top-performing assets in the market. Investors are closely watching the trends and developments in the cryptocurrency space, recognizing the potential for significant growth and profitability in the digital asset market.
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