At inception, Bitcoin (BTC) was an asset that would help people across the globe circumvent the difficulties associated with the traditional finance space. With the primary goal of making finance decentralized so that everyone can be included, the coin has met its fair share of resistance from global regulators and critics. However, upon the onset of the COVID-19 pandemic, which rendered the use of fiat currencies unsafe, the cryptocurrency got a unique chance to showcase its capabilities.
When it comes to serving as a store of value and streamlining cross-border transactions, BTC and alternative cryptocurrencies played a significant role seeing as they do not require physical contact. To this end, the crypto market broke out on a bull rally that saw many coins surpass their initial all-time highs and even trend higher. For instance, BTC broke past its 2017 ATH $19,783.21 and closed 2020 trading at $29,001.72.
The crypto market also proved that it could hedge against inflation, especially in the face of an imminent financial crisis. While the traditional financial system and other mainstream stocks performed poorly in the wake of the pandemic, the crypto space remained resilient and even soared higher.
ETH and BTC became the best risk-adjusted assets in 2020
After the stellar performance of the crypto sector in 2020, researchers from IntoTheBlock looked into the risk-return performance of different assets in the past year and found that Ethereum (ETH) and Bitcoin (BTC) outshined all other stocks. The researchers leveraged the Sharpe Ratio, a top-tier metric that is commonly used to conduct these evaluations.
Per their findings, ETH took the top spot, followed closely by BTC. The stocks of American multinational conglomerate Alphabet and electric vehicle maker Tesla came next followed by Apple, Microsoft, Facebook, Amazon, Tencent, and Netflix.
IntoTheBlock, which takes pride in providing individual investors with the largest and most advanced crypto indicators in the market, granted anyone free access to its charts.
Apart from outperforming the stock market, the crypto space continued achieving significant milestones with San Salvador becoming the first country in the world to accept BTC as legal tender alongside the US dollar.
On top of this, mainstream firms, such as Tesla and PayPal entered the nascent space. However, Tesla’s entry into crypto has been controversial, seeing as its CEO, Elon Musk, has been tweeting information that rocks BTC’s price regularly. After announcing the news of Tesla purchasing $1.5 billion worth of BTC, the coin soared to hit an ATH of $64,863.10.
Soon afterwards Musk said that Tesla had stopped accepting BTC as payment until miners can start using more sustainable energy sources. Consequently, BTC’s price plunged to the $30,000 level and has not recovered from its massive slip to date.