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Bitcoin's 2021 Returns Destroy Everything on Wall Street, Goldman Sachs Says
Bitcoin's lead over assets from stocks to bonds, oil, banks, gold and tech stocks and the euro has widened.
Updated Sep 14, 2021, 12:23 p.m. Published Mar 8, 2021, 10:35 p.m.
Goldman Sachs, the storied Wall Street firm, didn't start including bitcoin in its weekly ranking of global asset-class returns until late January, when the largest cryptocurrency quietly appeared atop the chart.
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But since then, bitcoin's lead over assets from stocks to bonds, oil, banks, gold and tech stocks and the euro has widened.
As of March 4, bitcoin's year-to-date return, at about 70%, was roughly double that for the next-closest competitor, the energy sector, at about 35%, according to Goldman Sachs' latest "U.S. Weekly Kickstart" report.
The comparisons could become even more flattering to bitcoin now that a recent bout of selling in U.S. stocks has taken the Standard & Poor's 500 Index's year-to-date return to roughly zero – flat on the year.
- The recovery in oil prices and real yields has boosted year-to-date returns for cyclical sectors such as energy and financials, which are nevertheless underperforming bitcoin.
- Crude oil and energy have a higher risk-adjusted return (Sharpe ratio) than bitcoin so far this year.
- Gold is the worst-performing asset class year-to-date, as rising yields have punished traditionally defensive sectors such as consumer staples and utilities.
- Based on prior CoinDesk reporting, bitcoin is viewed by many investors both in crypto and traditional markets as a potential inflation hedge, especially in an era where central banks around the world are pumping trillions of dollars of freshly created money into financial markets to stimulate coronavirus-racked economies. Even so, gold has lost about 10% on the year, prompting some market observers to argue that bitcoin is stealing market share from the yellow metal.
- According to a survey, some 40% of Goldman clients have exposure to cryptocurrencies.
- That's the case even though, as recently as May 2020, Goldman's money-management division argued in a presentation that cryptocurrencies were "not a suitable investments for our clients," merely a beneficiary of a "mania" worse than the infamous run on Dutch tulips in the 1600s.
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- Altcoins accounted for the majority of trading activity, reinforcing KuCoin’s role as a primary liquidity venue beyond BTC and ETH at a time when majors saw more muted turnover.
- Even as overall crypto volumes softened mid-year, KuCoin maintained elevated baseline activity, indicating structurally higher user engagement rather than short-lived volume spikes.
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