In 2019, the financial performance of investments in cryptocurrencies turned out to be better than that of all other major asset classes.
Although the year has not yet ended, by analysing the data up to November 30th, 2019, the results are already very clear.
In the last 12 months, the overall return on financial markets has been 12.7%, while that of the S&P 500 has been 16.1%, and that of the US High Yield Bonds has been 10.1%. Gold yielded 19.8%, while oil 9.1%.
In short, among the major traditional financial asset classes, as of November 30th, 2019, none has generated returns of more than 20% in the last 12 months.
When considering only the performance of the first 11 months of 2019, the results change, but not by much.
Global financial markets returned 18.3%, S&P 500 27.6%, US High Yield Bonds 12.5%, gold 14.1% and oil 22%.
In other words, in the first 11 months of 2019, no large traditional asset class has exceeded a 30% return.
The performance of cryptocurrencies in 2019
By contrast, as of November 30th, the main cryptocurrencies had returned 83.8% in the last 12 months, and 59% since the beginning of the year, with bitcoin reaching 117.9% in the last 12 months, and 101.2% since the beginning of the year.
These percentages fell slightly during December, but are still far higher than those of traditional asset classes, which means that it is likely that the year will close with the performance of cryptocurrencies well above that of all the main traditional financial asset classes.
Compared to 2018, the trend has changed: last year it went in the opposite direction, with the annual performance of cryptocurrencies significantly lower than that of the main asset classes, but it was the period after 2017, which was a real triumph.
For instance, considering only bitcoin, its performance is much better than the others, whether the last four or five years are taken into account or whether we go back even further. In fact, in this case, the gaps from the yields of the main asset classes become abyssal.
Bitcoin is also the main driver of the high yields of cryptocurrencies in 2019, although it was not the only cryptocurrency to perform very well. However, with the exception of stablecoins, not all cryptocurrencies performed well in 2019. One example is the third per market capitalisation, XRP, which is still below the levels at the beginning of the year.
Ether (ETH) did not perform particularly well in 2019, but the Ethereum network is showing strong growth at the fundamental level, and the next move to version 2.0, based on Proof-of-Stake instead of PoW, could prove to be a significant impact event, although it is not yet clear when it will happen.
Among the top 10 cryptocurrencies per market cap, only Binance Coin (BNB) has performed better than bitcoin, with +155% since the beginning of the year, while in third place there is Litecoin with +47%, and in fourth place Bitcoin Cash with +34%.
Taking into consideration the top 20, 70 or 100 cryptocurrencies per market cap, thanks to the respective Bitwise indices, it is clear that it was bitcoin that dragged the performance of the entire market in 2019, given that the wider the range of cryptocurrencies and tokens are taken into consideration, the lower the performance is.
Overall, from January 1st to November 30th, the total market capitalisation of cryptocurrencies increased by 73 billion dollars, and 93% of this growth was attributable only to bitcoin.
Bitcoin is clearly a decidedly unrelated asset with respect to the others since its trends do not seem to follow those of any other asset class. In particular, by analysing its performance over the years, and comparing it with that of gold or the stock market, the trends appear clearly different.
Only at specific times do overlaps occur, but they are short-lived and not perfectly overlapping.
Moreover, Bitcoin continues to show very solid fundamentals, both for the number and volume of on-chain transactions as well as for the hash rate and this, combined with the upcoming halving in May, suggests that the trend could continue in the coming year.