For years, the volatility of cryptocurrencies has remained a hot topic. Regardless of the recent bullish run of Bitcoin, there are a number of people who still argue that it is not a safe asset because of its wild price swings. Naysayers have always used this argument against the top cryptocurrency as the last resort. However, VanEck, the investment management firm had some major insights to share regarding this metric. The New York-based company manages assets worth $49 billion and it published a report over the weekend, in which it did a comparison between the volatility of the S&P 500 index and Bitcoin.
The former measures the performance of 500 of the largest companies in the country, and represents their returns and risks. According to the VanEck report, the comparison highlighted that Bitcoin’s volatility was less than at least 112 of the 500 companies on the S&P in the 90 days from November 13th. If adjustments are made for 365 days, the pioneer cryptocurrency had a volatility less than about 145 stocks. The report by the investment firm challenged some of the conventional thoughts regarding this crypto. The company said that most of the volatility that was seen in the last couple of years was because of the small market size on a whole, regulatory problems and limited penetration in the mainstream capital and stock markets.
The report by the investment firm challenges the opinion of some very prominent figures in the world of traditional finance. Earlier this year, Ray Dalio, the hedge fund manager had refused to acknowledge Bitcoin as a potential safe-haven asset for anyone who was looking to deal with a tough 2020. Dalio had spoken at the World Economic Forum and said that investors needed to diversify their portfolios and get rid of their cash holdings. But, when he had been questioned about Bitcoin, the billionaire criticized the asset for not functioning as a currency or store of value due to its volatility.
The same route was taken by Fox news, just last week as they also criticized the leading crypto for its volatility in an article. The piece contained quotes from some prominent crypto skeptics and warned the readers about the volatility of digital assets meant that they didn’t have any ‘real use’. However, it seems that most of these detractors have turned out to be wrong. In the last decade, Bitcoin has managed to blow out other investment options and has delivered returns of 90,000%. Moreover, it seems to be continuing on the same trajectory.
This year, the value of the crypto has risen by 150.3%. In contrast, the data by MarketWatch shows that there has also been a 14.38% increase in the S&P 500. The index recently saw the addition of Tesla, the automobile manufacturer that rose by 400% this year. But, a number of stocks on the index have been severely impacted by the coronavirus pandemic, which means that it cannot compete with Bitcoin’s returns. Bitcoin has proven to be a safe-haven for investors who bought Bitcoin before the pandemic.