How Does the Bitcoin Market Compare to Other Markets?

Nov 05, 2020 at 11:51 // PR
Guest Author

The Bitcoin market is one of the few cryptocurrency markets that continues to gain popularity amongst traders and investors, but how does the value of such markets compare to the long-established financial markets? Bitcoin and cryptocurrency as a whole is vastly misunderstood so read on to find out all that you need to know.

What is Bitcoin?

So, what exactly is Bitcoin? Launched in 2009, Bitcoin was the first cryptocurrency to successfully record transactions on a secure, decentralised blockchain-based network. Bitcoin is free, open-source software that allows transactions to be made without any middlemen (banks) with lower transaction fees than traditional online payment systems. There is no physical currency and balances are kept on a public ledger that everyone has transparent access to.

Different cryptocurrencies 

As mentioned, Bitcoin was the first cryptocurrency but the success has inspired hundreds of other currencies that are collectively known as Altcoins. Bitcoin has continued to dominate the market despite this although there are some other currencies which have made an impact, such as Ripple, litecoin and Ethereum. Ethereum also uses blockchain technology but is designed for use on smart contracts while Ripple is designed as a cross-border payment solution for large financial institutions. 

Volatile market but significant returns 

Bitcoin and other cryptocurrencies have been volatile over the years which has led many to be sceptical. Looking at the figures, though, shows that those that invested and decided to hold through the volatility will be counting their riches now. A $1,000 investment in 2015 would have given an investor 3.801 BTC - 2.5 years later when Bitcoin hit an all-time high, this would have returned around a staggering $76,363.71. That same investment today would not be worth as much at around $34,936.89 but this is still a remarkable gain of 3493%. 

Stock comparison

It is interesting to see how the growth of the Bitcoin market compares to stocks. The Dow Jones Industrial average index increased by 45.3% in the same time frame while S&P 500 is up almost 48.4% over 5 years. Tech-heavy Nasdaq 100 index has nearly doubled at 99.1%. Compared to some of the major socks, Tesla has added 285.2% while Inc increased by 523.5%.

Compared to Forex

Compared to Forex trading, there are certain similarities with Bitcoin trading in that both are determined by market supply/demand, it does not take a long time to conduct trades and both are highly accessible. Although fast and accessible, both types of trading require a high level of knowledge of the market in order to find success which is why many Forex traders use a broker platform to make the best decisions. Volatility can be an issue in both but trading on the Forex market is smaller risk but this does make it more stable.

As you can see, the Bitcoin market is a fascinating one and it is understandable why it splits opinion as it is relatively new and has been extremely volatile but with breathtaking highs. This differs heavily to the more established financial markets like Forex although there are some similarities between the two to keep in mind.

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