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Bitcoin Annual Returns Show Long-Term Profitability

A simple calculation of Bitcoin annual return, which is the percentage difference in price from the beginning of the year to the end of the year, shows that the cryptocurrency has been extremely profitable practically every single year since it was launched. This blows away the profit percentages for other asset classes like stocks and precious metals. The Director of Research at Pension Partners and Manager of the ATAC Rotation Fund, Charlie Bilello, posted a chart of Bitcoin annual returns on Twitter.

Bitcoin Annual Returns, 2011-2018…

— Charlie Bilello (@charliebilello) September 10, 2018

Bilello’s calculations show that Bitcoin annual returns have been in excess of 1,000% during 2011, 2013, and 2017. In 2012 and 2016 Bitcoin annual returns were in excess of 100%, with 2015 having an annual return of 35%. The only years with negative annual returns for Bitcoin are 2014 and 2018 so far, at -58% and -54% respectively.

One thing that is noticeable immediately, is that generally when there is a 1,000%+ price increase during a year, Bitcoin tends to have a bear market the next year and decline. This is what the Bitcoin market is experiencing during 2018 so far. However, some experts are of the opinion that Bitcoin will rebound before the end of the year, especially since Bakkt, in partnership with the Intercontinental Exchange (ICE), will be launching physical Bitcoin futures by November 2018. This is expected to accelerate institutional investment in the Bitcoin market.

BitcoinNews went through the calculations to verify Bilello’s numbers using Bitstamp data on Bitcoinwisdom. In 2012, Bitcoin increased from USD 5.50 to USD 13.5, a 145% increase. In 2013 Bitcoin increased from USD 13.5 to USD 900, a 6,566% increase. In 2014 Bitcoin decreased from USD 900 to USD 275, a 70% decrease. In 2015 Bitcoin increased from USD 275 to USD 430, a 56% increase. In 2016 Bitcoin increased from USD 430 to USD 930, a 116% increase. In 2017 Bitcoin increased from USD 930 to USD 16,000, a 1,620% increase. In 2018 so far Bitcoin has declined from USD 16,000 to USD 6,500, a 59% decrease.

In easier to read format, BitcoinNews calculated from Bitstamp data, that Bitcoin’s annual return is 145% for 2012, 6,566% for 2013, -70% in 2014, 56% in 2015, 116% in 2016, 1,620% in 2017, and -59% in 2018 so far. There is a significant divergence from Bilello’s calculations, but the general findings are similar. Bilello likely used different data for his calculations, which is not surprising since there are many different exchange rates for Bitcoin around the world.

Above all, it is clear that Bitcoin is the most profitable asset class for long-term over the past decade. Therefore, the bear market during 2018 is to be expected since the same thing happened in 2014 after the major 2013 rally that brought Bitcoin over USD 1,000 for the first time.

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