The volatility of crypto prices has been a talking point for years. Despite Bitcoin’s recent bullish run, there are still many who argue that the asset isn’t safe due to its wild price swings. Naysayers have always fallen on this argument as their last resort against the leading cryptocurrency. However, investment management firm VanEck recently shared some significant insights on this metric.
S&P 500 Less Stable Than You Think
Over the weekend, the New York-based firm, which manages about $49 billion in assets, published a report comparing Bitcoin’s volatility to the stocks on the S&P 500 index. The index measures the performances of 500 of the country’s largest companies, representing their risks and returns.
As the VanEck report showed, Bitcoin is less volatile than 112 of the 500 stocks on the S&P over 90 days from November 13. When adjusted to 365 days, the leading cryptocurrency was less volatile than 145 stocks.
Challenging some of the conventional thoughts on Bitcoin’s volatility, the investment management firm explained:
“Much of the volatility over the past few years can be attributed to sensitivity to small total market size, regulatory hurdles and generally limited penetration in mainstream stock and capital markets.”
Time to Eat Those Words
VanEck’s report challenges several thoughts from various top figures in the traditional financial space. Earlier this year, hedge fund billionaire Ray Dalio refused to name Bitcoin as a potential safe-haven asset for investors looking to prepare themselves for a tough 2020.
Speaking at the World Economic Forum, Dalio told CNBC that investors would need to divest themselves of cash holdings and build diversified portfolios. When asked about Bitcoin, he bashed the asset for failing to function as a currency due to its volatility.
Just last week, Fox Business took the same route, bashing Bitcoin in an article for its volatility. The piece took quotes from notable crypto skeptics, warning readers that digital assets’ volatilities meant that they had “no real use.”
It goes without saying that most of these detractors have been wrong. Bitcoin already blew other investment options out of the water in the last decade, delivering 90,000 percent in returns. There was hope that it would continue on that trajectory, and it has.
Bitcoin’s value has risen by roughly 150.3 percent this year. On the flip side, MarketWatch data shows that the S&P has delivered 14.38 percent in returns over the past year. The index recently added automobile manufacturer Tesla, whose stock has jumped over 400 percent this year.
Even at that, the coronavirus had severely impacted many stocks on the S&P. This means that the index can’t hope to match Bitcoin’s returns.
For investors who purchased Bitcoin at the beginning of the pandemic, the asset has proven to be more than the safe haven they were looking for. Companies like MicroStrategy and Square have reaped significant benefits following massive Bitcoin purchases, while those that opted to focus on the traditional stock market remain hopeful for modest results to close out the year.