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How Bitcoin Compares to the S&P 500 in Terms of Returns and Risks

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by A1

a day ago


In 2024, Bitcoin demonstrated a 111% growth, while one of the safest indexes, the S&P 500, showed a 24% increase. We will explore which of these assets is more promising for investments.

Analysis of Recent Years

The S&P 500 index tracks 500 companies with the best performance on the U.S. stock market, including giants like Nvidia, Apple, and Microsoft. The index is often considered a safe investment, although individual companies within it can outperform. Bitcoin, on the other hand, is known for volatility, with a growth rate of 1,336% in 2017 and a severe drop of 73% in 2018.

Advantages and Disadvantages of Bitcoin

Bitcoin is more volatile compared to the S&P 500. If you invested in Bitcoin in 2017, you might have waited over two years to regain your investment. The risks are high, which BlackRock affirms by advising to invest no more than 2% of your funds in Bitcoin. However, some argue that inflation makes Bitcoin a safer investment over the long term.

Conclusion: What Should Investors Choose?

The S&P 500 has shown stability by keeping pace with inflation. However, the index structure means that investments could include underperforming companies. Bitcoin offers the potential for significant growth, but the risk of decline is also high. Both assets have a place in investment portfolios depending on the investor's risk tolerance.

The choice between Bitcoin and the S&P 500 depends on the investor's risk preferences and expected returns. While Bitcoin's high returns attract daring investors, the S&P 500 remains a reliable inflation hedge.

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