Bitcoin, Stocks, & Bonds: Pros + Cons
We break down the potential pitfalls as well as the bull case for each major asset class.
Dear readers,
With the latest bout of volatility across asset classes, your neighborhood TBL researchers feel quite at home—our job is to amalgamate market movements into a clear and cohesive narrative for our readers. But today, instead of connecting asset classes through correlation study, we’ll attempt to isolate bitcoin, stocks, and Treasuries and then assign some cons and pros for each. This can be difficult, as we continually preach just how interrelated these markets are. Nevertheless, we believe that this type of exercise can help bring clarity to individual global macroeconomic topics, even if they don’t explicitly assist in predicting performance.
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Bitcoin Con
Let’s begin with one that likely brings the largest worry to TBL readers—why bitcoin is likely to remain in a bear market. Remember that we will play devil’s advocate to each one of our positions, so don’t despair.
With previous bitcoin crashes, it has taken years to get back to the top. Each one of these four lines represents the past four major bitcoin bear markets—as each line comes back to the zero line, what you are seeing is the number of days it took for bitcoin’s price to fully recover. The current bear market, pictured in purple below, is clearly over 50% off the all-time highs and therefore hasn’t reached the top of the chart. Last cycle, pictured by the green line, took over 1,000 days. The current cycle is approximately 700 days. First, give yourself a tiny pat on the back for holding through the current bitcoin bear market, but second, remind yourself that another year of sub-$70,000 prices could very well be in store:
Our aim with this chart is to remind you that bitcoin bear markets last a very long time. The gains in between the bear markets are astronomical indeed, but one must have patience to participate.