Bitcoin Outperforms Gold and S&P in 2021

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Bitcoin (BTC) has continued its trend established in 2020 as one of the best performing financial assets available in 2021. Taking a closer look at comparisons between Bitcoin ($BTC), the S&P 500 ($SPX), and contracts for differences (CFDs) on gold, we see since the start of 2021 that:

• Bitcoin (blue line) is up about 63% year-to-date (YTD) from $29,412 to about $48,000 per Bitcoin.

• The S&P (red line) is up about 29% YTD from $3700.66 to $4791.46.

• Gold (yellow line) is down about 7.29% YTD from $1942.07 to $1800.80 per ounce.

A major part of Bitcoin’s strong performance in 2021 was due to rising inflation worldwide, especially in the United States. Many proponents of Bitcoin often claim that the asset is a superior hedge against inflation compared to gold. According to the United States Bureau of Labor Statistics and Trading Economics, the annual inflation rate in the U.S. has accelerated to 6.8% in November 2021, the highest rate increase since June of 1982.

More recent data from the U.S. Bureau of Labor Statistics includes the latest updates to the Consumer Price Index (CPI), which is a measurement of the average price change over time for goods and services. According to the latest CPI update:

• The price of “all items” has increased about 6.8%.

• The price of food has increased about 6.1%.

• The price of energy has increased about 33.3%.

• The price of all items without including food and energy has risen about 4.9%.

The data shown above does in fact support the claims of Bitcoin acting a superior hedge considering we are living in an inflationary economic environment. Bitcoin has not only retained value through its notorious periods of volatility, but has produced a 63% increase in value YTD compared to gold which has fallen about 7% in the same time period.