For a retail investor or a first time investor there exists many options for investing for long term growth. Equity markets offer a plethora of options for a retail investor in terms of individual stocks, ETFs, Mutual Funds, Bonds, ETNs, etc. In the recent years the surge of Bitcoin has attracted attention from several first time investors due to the significant growth it has returned in recent years. A person who had invested $1000 in 2010 in Bitcoin ( was around $0.09) would be worth around $550 million in 2020.
This data visualization report intends to portray a simple comparison of basic investment options like SPY Index ETF (that tracks the S&P index closely), Gold (which has been a safe haven for many years) and the “New Gold” - Bitcoin. This report also portrays the volatility of each of these options have and the popularity gain of Bitcoin over the years.
Lets take a look at the past 12 months of Bitcoin Price data
As seen Bitcoin has greatly appreciated over the past year alone with a low point during March of around $6439 and a highpoint of $29,002.
Let’s take a look at Gold Prices in the same time frame.
As you can see above, Gold has appreciated as well but not as steeply as Bitcoin. However point to note from this plot is that when COVID impacts started to impact economy during March of 2020, when the stock market lost points, gold gained, as people flocked to safe havens. It raised from $1564 in March to $1967 at its peak in August.
Lets take a look at the SPY Index ETF for the same time frame
SPY which follows the S&P Index fell sharply from $3250 in Jan 2020 to $2569 in March, and eventually recovering to about $3750 in December.
Let us compare the growth for all three cases in the following plot
As you see in above plot, Bitcoin has returned over a whopping 257% from $9388 in January 2020 to $33543 in December 2020. Whereas SPY (green) returned a pale 18.40% compared to Bitcoin and Gold (yellow) returned about 25% increase ( driven by safe haven investments)
Bitcoin recent ascent cannot be overstated. It has provided incredible returns over past few years, however at an expense of significant volatility.
Let us take a look into the interest in Bitcoin over time. We have a heat map plot that shows how the volume has grown significantly over the past years on Bitcoin.
As shown above, from 2018 onwards there has been a constant uptick in the transaction volume for Bitcoin. These volumes are in Billions and the interest is only growing as Institutional investors are now investing into Bitcoin and holding certain % of thier cash reserves in Bitcoin (example - Square invested about $170m in Bitcoin about 5% of its cash reserves).
The following heat map intends to show the SPY ETF and intends to identify a pattern in trading volume in S&P based indices.
One key data point to note from this heat map is the volume that was transacted during the March of 2020, when COVID was having its impacts on businesses across the world and economy as a whole was taking a toll. Stocks went down significantly and the volume here shows the sell off. This heat map helps us in showing this was once in a 5 year event or even 10 year ( after 2008) to have such a sell off in the market. We can also infer January has been on average a busy month for SPY transactions.
For a first time investor, there are a lot of options for investing and to benefit from the power of compounding, however there are risks associated with every investment and volatility can be a nerve breaking feature for early investors. One needs to be cognizant of these risk and invest wisely.