Bitcoin’s price rose more than 60 percent in May — the highest monthly return in over a year and a half. This means the world’s most popular cryptocurrency has performed better than almost any global asset in 2019. Boutique analysis firm Delphi Digital even labeled Bitcoin the “King of the Asset Class Hill” in its latest market commentary, after it posted four consecutive months of solid returns.
“The acceleration in BTC’s performance comes at a time when conventional risk assets, notably global equity markets, continue to see selling pressure […],” said Delphi Digital. “May’s outperformance has been especially important given the broader weakness across many other asset classes.”
Investors flee risky assets, but Bitcoin remains unfazed
Delphi Digital explained that public equity markets are currently “riddled with concerns.” The New York Stock Exchange is one example of a public equity market.
Trade war disputes, stagnating earnings expectations, and waning sentiment for economic growth in the remainder of 2019 have convinced investors to flee riskier positions for “safe haven assets” like long-term US treasuries.
Still, according to the firm’s data, Bitcoin has absolutely crushed those assets this year. Its list includes the Japanese Yen, Gold, and WTI crude oil.
“Contrary to its recent history, Bitcoin has remained largely unaffected by the sell-off in risk assets, though expectations for market volatility are trending higher,” said its analysts. “It is still too early to claim victory yet, but BTC’s uncorrelated nature has so far proved true.”
Delphi Digital determined that even small Bitcoin allocations in “traditional” investment portfolios (60 percent stocks, 40 percent fixed income) over the past three years significantly boosted risk-adjusted returns.
This is understandable, considering this timeframe includes Bitcoin’s monstrous 2017 bull-run to $20,000.
“Just a 3-percent allocation (which we acknowledge is still a sizable position for most conservative investors) would have generated a compound annual growth rate of 12 percent over the last 36 months, without raising the portfolio‘s volatility or maximum drawdown by much,” said the firm.