According to data from stock-to-flow (S2F) creator PlanB, Bitcoin recorded a 100% gain or more in five of the past ten years.
Bitcoin’s strong long-term performance strengthens the DCA (Dollar Cost Averaging) approach that has enjoyed increased popularity amongst bitcoiners in recent months .
CoinMetrics, a cryptocurrency research firm, found that cost averaging into Bitcoin from January 2018, near its all-time high at $20,000, to August 6th would have returned 61.8%. The researchers wrote:
“Despite Bitcoin still trading 30% below ATHs, dollar cost averaging from the peak of the market in Dec 2017 would have return [sic] 61.8%, or 20.1% annually.”
Bitcoin has seen significant gains over the past ten years because of its exponential network growth. While compared to established safe-haven assets like gold, Bitcoin is still a nascent store of value, year-over-year, more institutions, financial service providers, and trading platforms have begun supporting Bitcoin, contributing to the expansion of its surrounding infrastructure.
For an asset that is already growing at a pace not comparable to traditional financial assets, low-risk bets may prove to be more practical. PlanB explained:
“You do not play highly asymmetrical bets by going all in. Play is more like VC: you size your bets, if you invest for example 10% of your capital, you can only lose max 10% in those 2 bad years. The asymmetric magic happens when you stack those small investments.”
Since its inception in 2009, Bitcoin has consistently outperformed alternative cryptocurrencies over longer periods. Bitcoin’s market capitalization hovers at $212 billion, accounting for 59% of the entire cryptocurrency market.
In the eyes of Bitcoin proponents, even as new altcoins continue to emerge, Bitcoin will likely remain compelling for most investors. Dr. Adam Back, CEO at Bitcoin infrastructure company Blockstream, sees Bitcoin’s technological and architectural fundamentals as unique characteristics that hold strong over other assets:
You can't cut and paste digital scarcity, value, decentralization nor store of value thesis.
Dan Held, who leads growth at cryptocurrency exchange Kraken, attributes Bitcoin’s growth to its “persistence” as a store of value:
"Bitcoin’s narrative of SoV/Gold 2.0 was present from day one, has Protocol Market Fit (PMF), has held off competing narratives, has been delivered on, and remains the dominant narrative today. There is persistence of the original intent."