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What is an asset class?
An asset class is a collection of investments that have similar characteristics and are subject to the same laws and regulations. Some common established asset classes include: stocks, bonds, gold, real estate, and fiat currencies.
Is Bitcoin an asset class?
Years ago declaring Bitcoin as a part of a new digital asset class was controversial, but with major traditional financial institutions such as Goldman Sachs admitting it is not only a new asset class, but an investable asset class, the tide has turned.
Comparing asset classes
Each asset class has strengths and weaknesses. For example, equities tend to outperform bonds and gold during times of high growth. Gold tends to do better than other assets in downturns or times of high inflation. Bitcoin seems to have properties of both equities and gold. It has done well during times of economic expansion, and it many argue it will act similarly to gold as a hedge in high inflation regimes.
Best performing assets
First, let’s compare several specific asset’s performance over the past ten years.
As you can see, Bitcoin has outperformed all of these assets, and it’s not even close. In fact, Even though it has made tremendous gains in the past ten years, it still represents only a tiny percentage of the market caps of both equities and gold. This indicates that Bitcoin’s growth still has plenty to go. But Bitcoin is more than just a high growth performer. It may also be a hedge against inflation.
