How Bitcoin, Ethereum Have Outperformed The S&P 500 Since 2020: Report

A new report from Copper.co, a UK-based digital asset service provider, highlights a significant alignment between Bitcoin BTC/USD, Ethereum ETH/USD and the S&P 500.

What Happened: The report notes that both cryptocurrencies have achieved an 83% compound annual growth rate (CAGR) since their 2020 lows, compared to the S&P 500's 20% CAGR over the same period.

The findings come as Ethereum briefly dipped below a key trendline on the five-year anniversary of Black Thursday but closed above it, raising questions about its ability to maintain this level.

Copper.co's analysis details the performance of Bitcoin and Ethereum over the past five years, with Bitcoin dropping from $94,265 on March 3 to $80,699 by March 10, and Ethereum falling from $2,518 to $2,020 over the same period, according to data sourced from Copper Calc and TradingView.

Despite these declines, both assets have shown identical long-term growth since March 13, 2020, with Bitcoin's closing price CAGR at 70%, just 1% above Ethereum's.

The S&P 500, currently in correction territory, mirrors patterns observed in 2020, suggesting a possible market shift.

"Ethereum and Bitcoin have tracked remarkably similar growth trajectories since their 2020 lows, with both delivering an 83% CAGR," Fadi Aboualfa, Copper.co's Head of Research told Benzinga, adding, "The S&P 500's correction echoes patterns seen in 2020, which suggests a potential turning point and raises optimism levels for investors looking for a bounce."

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Why It Matters: The report also explores Bitcoin's relationship with the M2 Global Liquidity Index, which has historically correlated with Bitcoin's price movements at an average of 0.82 since 2015, with a typical lag of 10 to 14 weeks.

The most recent M2 cycle bottomed on Jan. 10, indicating Bitcoin may trade sideways until late March or April, based on 70-day and 100-day lags, respectively.

Copper.co noted this timeframe aligns with prior studies, including its Market Cap vs. Realized Market Cap analysis and Bitcoin price simulations, which suggest a potential price peak of $160,000 by May or June, when markets might overheat.

However, the report cautions that M2 must continue rising to sustain this trend, a factor often overlooked in such analyses.

From a portfolio perspective, Copper.co applies Modern Portfolio Theory, finding that Bitcoin's 70% annualized volatility, a 4% risk-free rate, and a 0.25 correlation with the S&P 500 suggest an optimal allocation of 18% Bitcoin to maximize the Sharpe Ratio.

"As of today, the risk-to-return symmetry is striking. With the S&P 500 delivering a 20% CAGR over the past five years, this implies a 4:1 risk-reward ratio compared to crypto assets," Aboualfa stated, emphasizing the potential for balanced investment strategies.

The report, intended for institutional and professional clients, includes a disclaimer that digital assets carry high risks and may not be suitable for all investors, reflecting Copper.co's adherence to Swiss financial regulations.

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