There are a lot of places where you can park your money in order to try and make profits over time. You can put it in a savings account, buy stocks, bonds, gold, cryptocurrencies, or even something alternative like real estate and collectibles. Deciding on which of these places to put your money depends on a variety of factors including how long you can afford to wait, what type of returns you’re hoping for, and your risk tolerance.
In 2024, this can be a hard decision, as there are so many options, but for the purposes of this guide, we’re going to compare crypto to each of the other options. We will also take a look at Bitcoin compared to these options as well, as it’s its own beast. Let’s jump in.
Quick Comparisons
Below we’re going to quickly compare how crypto assets behave compared to traditional investment classes like cash (savings), stocks, bonds, and the gold market.
We’ll discuss basic return comparisons (such as staking crypto vs holding cash or bonds), but also look at some more specific examples of digital assets’ performances compared to these traditional investments over similar time frames.
Crypto vs Cash
Before the COVID pandemic, staking a cryptocurrency such as Ethereum, Solana, or Cardano would likely outperform holding cash in a savings account, as staking returns are between 4-5% for most proof of stake digital assets.
However, with the tightening of interest rates and the attempts by federal regulators to reduce spending and curb inflation, many savings accounts are offering rates around 5% now too. This means that crypto and cash have very similar base percentage returns in 2024.
It’s certainly worth noting that those interest rates for cash savings are likely to go down over time, as it’s meant to curb spending. Comparatively, staking rates will remain around the same range.
The difference between cash and crypto in 2024, is that crypto assets can also increase in base value over time. So even though staking Solana may actually give you a percentage less than holding cash in a savings account, had you bought some in early 2023, you’d be up at least 10x on your investment in addition to the staking returns.
For example, if you had invested $1k into SOL in January 2023, you’d have over $10k now in addition to the staking returns. If you had put $1k into a 5% APR savings account, you’d have $1,050 (a bit more if you compounded, but not even close to $5k).
Crypto vs Bonds
The comparison between crypto and bonds is extremely similar to the one between crypto and cash. This is because bonds in 2024 have about the same returns as savings accounts, of 5%, at least on shorter-term bonds of 1-6 months. Bonds for longer-terms have rates that drop below 5% depending on how long it is for.
You can once again take the Solana example from the cash comparison but use it for bonds to see that in 2024, crypto is not really like bonds or cash.
Crypto vs Gold
Though gold is a store of value, most crypto assets, other than Bitcoin, are not. This makes it hard to compare cryptocurrencies that aren’t Bitcoin to gold, especially since many of them haven’t been around for more than about five years.
However, in 2024, crypto is performing much better than gold, as the gold markets are down about 2% on the year and most crypto assets are up. Bitcoin is up 37% on the year compared to the negative returns for gold. Even over three years, gold is only up around 10%, whereas if you’d bought Bitcoin at the beginning of 2021 you’d be up over 50%.
Crypto vs Stocks
Comparing crypto and stocks is where we get more parity, which is mostly due to the fact that there are stocks that offer dividends much like there are digital assets that offer staking returns. Stocks, unlike cash and bonds, can also increase in base value over time once you buy them.
In 2024, crypto and stocks have performed quite similarly thus far, though Bitcoin itself is certainly outperforming stocks. Though Bitcoin has, at many times, been fairly correlated to markets like the NASDAQ, Dow Jones, and S&P 500, it has never been for more than shorter time periods.
If you look at the one year returns between Bitcoin, and those other three major markets, Bitcoin is up 129%, whereas the best any of the other three has done is the NASDAQ which is up almost 35%.
Bitcoin vs Other Digital Assets
As we can see, Bitcoin is in a league of its own when compared to cash, stocks, bonds, and gold, but it’s also performed better over time than any other digital asset. Though there are likely shorter term gains to be made within the cryptocurrency market, it’s fairly evident that just buying and holding Bitcoin is a solid investment strategy for the long term.
If you take Bitcoin’s entire history and line it up with these other markets, Bitcoin has outperformed everything since its inception in 2008. Though there has certainly been volatility, long-term holders continue to make gains over time.
Closing Thoughts
2024 is just getting underway, but it’s already fairly clear that crypto, and especially Bitcoin, isn’t really like cash, stocks, bonds, or gold. The ability to stake and earn extra returns on digital assets apart from their value increasing makes them a step above cash and bonds, while keeping them similar to stocks.
However, over the long-term it seems like they don’t perform like stocks either. Do your own due diligence before investing in any of these types of assets, and only invest what you can afford to lose.
