- When it comes to Bitcoin, the allure from individual investors largely rests in the high returns it’s been able to deliver. To this end, the price of Bitcoin has risen in eight of the past 10 calendar years, posting triple-digit or greater returns in six of those years. In other words, it’s been a life changing investment for early adopters.
- However, what’s often overlooked is the difficulty individuals have had to endure to achieve these returns. The above chart helps bring this to light by outlining Bitcoins drawdowns from previous all-time highs. As we can see, the price of Bitcoin has entered nearly 20 distinct bear markets over the past ten years, and has been in a drawdown greater than twenty-percent for nearly 80% of its history.
- These stats serve as a timely reminder as Bitcoin momentum has waned in recent weeks. A few Twitter interactions from Elon Musk, followed by a crypto warning from the Chinese government, have driven the price of Bitcoin down 46% from its mid-April highs. Undoubtedly, the price of Bitcoin is under pressure. History suggests that shouldn’t come as a surprise. Remarkably, this is its third 20% decline of 2021 and it’s still up 16% on the year.
- Source: RBC GAM, Bloomberg. Data as of May 19, 2021.