- I have analyzed price changes in price of assets used in conventional portfolios versus major Cryptocurrency asset - Bitcoin.
- Daily high prices are pre-normalized and performance of index fund S&P500, Gold and Bitcoin are compared over recent years.
- In addition transaction volume changes for S&P500 and Bitcoin were analyzed.
- Interestingly CPI rates reflecting inflation had sharply increased with the current monetary policy in the USA and the pandemic outbreak.
- Overall, high appreciation in S&P500, representing stock market, as well as Bitcoin performance could be linked to the monetary policy.
- Gold, so called wealth preserving asset, has disappointed with its weak performance. With the increasing inflation it has effectively lost its value.
- Bitcoin has clearly outperformed the other assets. Also transaction volumes consistently increase as crypto markets attract more users. It is not given that this increase will continue, as this asset has a relatively short history to track (since 2009).
- In order to take advantage of Bitcoin's performance one could allocate small percentage of portfolio to this asset for a long term investment. This allocation needs to be closely tracked as in a relatively short time Bitcoin can rise into a big part of this portfolio. A rebalancing might be necessary if a small exposure to Bitcoin is desired.
