In the eyes of many of crypto’s cynics, Bitcoin (BTC) is an asset that is energy inefficient, slow, and of little intrinsic value. Indeed, transactions made on the base Bitcoin blockchain can take upwards of twenty minutes, cost dollars at a time, and purportedly consume a large amount of electricity compared to what PayPal uses, for instance.
However, Delphi Digital, a markets research and analysis firm, recently proposed that BTC is the crème de la crème of assets. Let’s take a look at why.
Bitcoin, the King of The Asset Class Hill
BTC may have plunged by around 17% in the past week, but the New York-based Delphi is entirely bullish.
In the firm’s latest market commentary, shared by The Next Web’s “Hard Fork” column, its analysts stated that Bitcoin could be the “King of the Asset Class Hill”, looking to the fact that save for the recent retracement, BTC (and other digital assets for that matter) are absolutely lapping every other asset class, even the more risky, high-return blue chips and the venture-backed Silicon Valley darlings that have begun to trade on public markets.
As seen above, this is clearly the case. At the time of their analysis (end of May), Bitcoin was up over 120% year to date, while crude oil and the Nasdaq 100 index were up a mere 18% and 13%, respectively.
It’s an even scarier sight for tried and true assets, like gold, foreign currencies, and government bonds, which are up less than 5% so far. Delphi explains:
“The acceleration in BTC’s performance comes at a time when conventional risk assets, notably global equity markets, continue to see selling pressure… May’s outperformance has been especially important [for Bitcoin] given the broader weakness across many other asset classes.”
Backing its Bitcoin-boosting quip with fundamentals, the Delphi team looks to the fact that BTC has been undeterred by the state of the macroeconomy and the geopolitical scene, adding that public equity markets have been “riddled with concerns.”
They specifically cite the raging trade war between China and the U.S., which has sent the Chinese Renminbi (Yuan) into somewhat of a freefall; stagnating earnings expectations from public corporations, which has begun to materialize in the stock market as volatility; and questionable macroeconomic figures that hint at slowing economic growth.
Delphi explains that this confirms Bitcoin’s uncorrelated nature, even in times of traditional market tumult, arguably one of the crypto asset’s biggest value propositions.
Indeed, during a CNBC “Futures Now” segment on Tuesday, “cryptocurrency bear” Peter Boockvar stated that in spite of his overall skepticism, Bitcoin is actually proving itself to be a hideout in the volatile stock market. If these market conditions persist, Bitcoin may continue to prove its value, and thus spark further investor interest.
With all this in mind, Delphi concluded that it may be wise for investors, whether mom & pop or institutional, to have a three percent allocation into Bitcoin, as that would “have generated a compound annual growth rate of 12 percent over the last 36 months, without raising the portfolio‘s volatility or maximum drawdown by much.”
Bitcoin Technically Superior
Bitcoin’s relative outperformance arguably shouldn’t be the only thing that pundits laud the cryptocurrency for. Per previous reports from Blockonomi, data firm DataLight postulated that Bitcoin could overtake Paypal, Visa, and its ilk in a decade’s time.
The firm explains that while BTC is somewhat imperfect, with technological improvements and proper infrastructure, Bitcoin can eventually become the “world’s main payment system.” Datalight specifically points its finger at the high fees and long transaction times of legacy payment rails, like PayPal, which charges 4.5% on international transactions that often take days to finalize.
Whether Bitcoin continues to prove itself as the “King of the Asset Class Hill” and as an alternative to traditional payment networks remains to be seen though.