Bitcoin Beats Stocks, Bonds, And Gold, Again

Bitcoin has left stocks, bonds, and gold in the dust in the first half of 2017.

The Bitcoin Investment Trust Shares have soared 220.59%, while the S&P 500 and SPDR Gold shares rose in upper single digits; and all three investments outperformed the iShares 20+ Year Treasury Bond, which gained a modest 6.13 percent.

Stocks, Bonds, And Bitcoin In The First Half Of 2017

Fund YTD Performance
SPDR Gold Shares (GLD) +7.68%
Bitcoin Investment Trust Shares (GBTC) +220.59
SPDR S&P500 (SPY) +8.17
iShares 20+ Year Treasury Bond (TLT) +6.13

Source: 6/30/2017

(AP Photo/Kin Cheung, File)

Stocks, Bonds, And Bitcoin In 2016

Fund YTD Performance
SPDR Gold Shares (GLD) 8.53%
Bitcoin Investment Trust Shares (GBTC) +153.09
SPDR S&P500 (SPY) +9.77
iShares 20+ Year Treasury Bond (TLT) -1.48

Source: 12/29/2016

A growing divide among investors regarding the state and the outlook of the US economy and the Federal Reserve’s unconventional monetary policies is a major factor behind the Bitcoin rally.

Then, there’s the return of the old fiscal easing and huge budget deficits that feed into inflation, which undermines faith in national currencies.

And the shaking up of the public’s confidence are attempts by certain national governments have been trying to manipulate their own currencies, particularly India and Venezuela.

Apparently, the ongoing run up in Bitcoin and other digital currencies has most of the elements of a bubble. It’s an exotic asset that comes with big advantages—a better hedge against global uncertainties than conventional hedges like gold; a convenient medium of payment around the globe; and a limited supply–21 million.  

Meanwhile, there’s investor hype. More and more investors are becoming familiar with the digital currency, and can use investment trusts like GBTC to conveniently participate in the market.

Investors who have been around Wall Street long enough know all too well that when money becomes tight and investment promises aren’t fulfilled, bubbles and manias end; and millions made are lost much faster than they were made. And then some. All it takes is a big investment scandal that will cool off the hype for the digital currency or a big jump in interest rates that will cut off the air that fuels this bubble and many others on Wall Street.

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