- Comparing Bitcoin’s Annual Performance against the Dow Jones Industrial Average
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Hoarfrost Finance | Long-term DeFi Solutions
Public perception of the cryptocurrency industry skews towards Bitcoin’s performance. During a boom cycle, general interest grows and new investors flood the market. Understandably, when Bitcoin’s price drops, these same investors sell their cryptocurrency and vacate the market. The severe level of volatility present in the cryptocurrency industry can be frightening to novice investors, causing emotion to overtake research and facts.
Despite considerable volatility, Bitcoin continues to outperform other asset classes year-over-year. The Dow Jones Industrial Average maintains an average increase of 11.78% over the course of the past decade. Compared against the June 2011 value, the overall increase is approximately 188%.
Dow Jones Industrial Average Percent Increase by Year 2011–2021
In contrast, Bitcoin’s average increase by year is 318.93% since 2011. In that span of time, the value of BTC increased by an astounding 153,069% — from $23.95 to $36,683.92. Both the DJIA and Bitcoin suffered two years of negative overall growth — but in any two-year period, Bitcoin drastically outperformed the Dow Jones.
Bitcoin Percent Increase by Year 2011–2021
Past performance not necessarily being indicative of future growth notwithstanding, Bitcoin and the cryptocurrency industry would do well to extol the virtues of long-term investment over day trading. While holding is ostensibly the preferred tactic, a large subsection of the cryptocurrency industry chases daily value changes — with most losing money in the process.
The advent of Decentralized Finance and increased access to alternative investments — including staking and yield farming — will hopefully help combat emotional investing and bring a wider range of investors into the space. The already steep learning curve necessary to engage with cryptocurrency frustrates non-technical investors. Success for decentralized finance will require increased automation, reducing the active role of the investor. This includes automatic compounding and payouts, allowing these investors to enjoy their earned interest while remaining unconcerned about day-to-day volatility.
Veterans in the cryptocurrency space understand the necessity of long-term investing, but most earned this knowledge through previous bust-cycles. Discovering a less traumatic catalyst is crucial for growing the industry as a whole.
Hoarfrost Finance is a decentralized finance company aimed at encouraging long-term investing through locked assets. All thoughts expressed in this article are analytical and should not be construed as financial advice. Nothing in this article may be seen as establishing a binding agreement.
Hoarfrost Finance Twitter: https://twitter.com/hoarfrostdefi
- Date of publication:
- Fri, 06/11/2021 - 07:44
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