Bitcoin Investment Guides

Bitcoin vs. S&P 500: Where’s the Money?

Bitcoin investment

While the S&P 500 Index has enjoyed generous returns over the last several years, bitcoin’s astronomical price increases make those returns look far less impressive.

The S&P 500, a benchmark group of stocks, has produced an average annualized total return of 9.8 percent since 1928, according to LPL Financial data reported on by CNBC.

Bitcoin’s Sharp Returns

Bitcoin has been around for far less time, but it has generated immense returns nonetheless. The digital currency came into existence in January 2009.

While price data for bitcoin’s early days are scarce, we do know that the currency’s price has risen from $0.05 to roughly $4,400 between July 2010 and the time of report, according to the CoinDesk Bitcoin Price Index (BPI). This represents a climb of nearly 9,000,000 percent.

In the roughly 9.5 years since its inception, bitcoin has experienced a compound annual growth rate of 232 percent, according to analysis conducted by Bitcoin Market Journal.

That means that in the time that bitcoin has been around, its annual return has been more than 20 times that of the S&P 500.

Consider The Time Span

However, keep in mind that these impressive figures rely on bitcoin’s relatively short life span. Over a longer period, the digital currency’s average annual return could change drastically.

Bitcoin investment

For example, if bitcoin prices drop sharply in the coming years, it could reduce these returns quite a bit.

Alternatively, should bitcoin prices continue to climb, albeit more slowly, it will cause the currency’s average annual return to decline.

Market Capitalization

Another factor to consider is that bitcoin’s total market capitalization – in other words, its total market value – is far less than that of the S&P 500.

At the time of report, bitcoin’s market capitalization is more than $73 billion, according to the BPI. The S&P 500, in contrast, is worth more than $21 trillion.

Bitcoin Like A Single Stock

What this means for you is that investing in bitcoin is similar to investing in a stock, whereas putting your money into the S&P 500 gives far broader diversification.

By putting your money into a single stock which is in its beginning phases, you could generate some rather promising returns. On the other hand, you might lose all your money.

Key Considerations

As for which one makes a better investment, it all depends on your individual circumstances, risk tolerance, and investment goals.

If you are open to purchasing a speculative asset that has generated very strong returns, bitcoin may be the investment for you.

However, if you are looking for something that is a bit more proven, the S&P 500 index may be a better bet.

Bitcoin has risen far more quickly than the S&P 500 index, but it has been around for far less time. Over the coming years, its average annual return could plummet, wiping out significant wealth for those who hold it.

Since there are many variables to consider, you can benefit significantly from conducting the needed due diligence before investing in either bitcoin or the S&P 500.

If you are interested in receiving more educational articles that can help you make the right investments, subscribe to Bitcoin Market Journal today.


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