Bitcoin Used to be the Best Investment and Other Fun Facts About The Market During The Past Decade
Since 2010, Bitcoin, which was always perceived to be incredibly unstable by the experts, surprisingly did well compared to the rest. Bank of America Securities reported that if one had presciently invested $1 in Bitcoin in 2010, he’d be sitting on more than $90,000 today.
Although a single Bitcoin today is valued at $7,000—a far cry from what it was two years ago when it peaked at $20,000—it still is significantly—one could even say, galactically—higher than what its value was at the beginning of 2010. Despite this exponential increase in value, many still view Bitcoin as risky and speculative, given the many peaks and valley it’s been through on its way to the top.
Bitcoin’s rise was, without a doubt, helped by the many mainstream retailers who’ve adopted its use and accepted it as a form of payment. Many investment firms have also legitimized its use after launching their own futures trading in the cryptocurrency.
When Facebook announced its intention to launch Libra, its own digital currency, many investors saw this as a validation of Bitcoin, other cryptocurrencies, and the future of payment to which they are inextricably linked
Below are a few other interesting things the BofA report lists as having occurred during the last decade of this wild and turbulent market:
The U.S. did fantastic, Myanmar and Greece, not so much.
While Bitcoin was the best investment of the decade, one of the worst was the Kyat (Myanmar’s local currency).
Every dollar invested in the Kyat at the start of the decade would have returned an abysmal four-tenths of a U.S. cent today. (Ouch!) And investors who have been unlucky enough to have done that have all the violence and ethnic conflicts that happened in the country to thank for it.
In terms of stocks, Greece was a terrible choice because of its debt crisis. Indeed, the BofA reported that unlucky investors would be getting seven cents today for every dollar they shelled out in the Greek Equity Market in 2010.
The United States stock market performed the best during the last decade; BofA reports that a $1 investment in the U.S. stock market in 2010 would have yielded $3.46 today, which is an appreciation of 250%.
In terms of Bonds, the U.S. did fine and dandy, too; a 30-year Treasury worth $1 in 2010 is worth $2.08 today. Turkey, meanwhile, did the worst, with every dollar of Turkish bonds in 2010 yielding a paltry 61 cents today.
Turkish Bonds performed the worst, but bonds, in general, haven’t been lucrative for investors, and have generated practically no income for them this past decade.
Negative Interest Rates, Good (for Gold, at least)—While Oil performed Terribly
In an attempt to revivify slow-moving economies, central banks around the world have decidedly cut interest rates to below zero. According to the BofA report, this move has resulted in $17 trillion worth of sovereign debt sporting a negative yield in 2019. Contrast that to the conditions in 2010, when no bonds had negative yields.
While on the topic of central banks, interest rates in the U.S. have seen a lot of movement this past decade, but Brazil remained the most active, implementing 25 rate cuts and 24 rate hikes since 2010.
And the most inactive—by a large degree—was the central bank of Japan; 2016 saw them lower interest rates to below zero—the first and last movement in their rates since 2010.
Gold was the best commodity of 2010—and understandably so since investors and financial advisors don’t infrequently turn to gold as a way to insulate themselves from falling interest rates. Indeed, gold performed relatively stably, with $1 of gold in 2010 yielding $1.34 today.
The worst commodity? Crude oil; $1 of crude oil in 2010 will be worth 74 cents today.
Because of the decline in the demand for oil, energy stocks performed the best in the S&P 500.
Based on Materials from Cable News Network