How Bitcoin Returns are Dwarfing Investor Expectations

A recent survey on crypto twitter has revealed that a lower annual rate of return would be expected for almost 40% of those questioned. In reality, bitcoin investments have made a whole lot more.

Bitcoin Investors Expect Less Than 30% Returns

A recent survey conducted by industry observer Nic Carter has revealed some interesting findings on expectations on returns on bitcoin investments.

Over 1,700 people were polled and almost 40% of them said that 10-30% annually would be required in order to accept the exposure and volatility of investing in BTC.

Assume you were neutral on Bitcoin. What annual rate of return would you require in exchange for exposure (mindful of the return profile & the volatility)?

(Bitcoin has returned about 390% annual since inception [first print $0.000633 in Oct. ’09])

— nic carter (@nic__carter) January 18, 2020

The next largest category was a higher 30-70% returns from almost a quarter of the respondents. The results are surprising in that bitcoin has returned way more than that when the years since its inception are averaged out.

In 2019 BTC started the year trading around $3,800, while ending it at around $7,200 yielding a gain of almost 90%.

Compared to previous years (excluding 2014 and 2018), bitcoin actually underperformed in 2019.  The average, according to Carter’s figures, is around 390% per year over the past decade.

This figure has been derived using the new liberty standard first print in October 2009 which could be misleading as it was not the first market traded price in July the following year.

He compares these expectations to those from US public equity investors which generally expect real returns around 6-7% over the long term.

Crypto investor Ari Paul commented that expectations could be driven by people’s subjective opinions on the risk of a total loss.

“I’d wager that most bitcoin holders view the downside vol as less than entirely efficient though, so this mostly comes down to the risk of total loss estimated by the respondent.”

It was pointed out though that most respondents are unlikely to be ‘neutral’ as requested in the question.

More conservative views would be to hold for a five year period and avoid all the FUD and FOMO that permeates markets on a daily basis.

Will January Buck The Trend?

Long term views are pretty much all bullish. That is aside from Peter Schiff who has reportedly just lost his stash due to a software error, not a bitcoin error as he likes to proclaim.

Looking at January, it has been the worst month of the year for BTC over the past 5 years with an average performance of -14.8%.

So far so good this month as bitcoin is still up 20% even after the weekend correction. These are greater gains than many would expect after a year … and we’re only 20 days in so far.

Will bitcoin make more than 30% this year? Add your comments below.

Images via Bitcoinist Media Library, Twitter: @nic_carter