Bitcoin: A Crumby Way to Save for Later
There are better places to store Goldfish crackers than in your pocket, just as there are more reliable ways of storing wealth than putting it in Bitcoin.
By Kristi Higgins Investment Strategist and Vice President, Dimensional Fund Advisors
For investors seeking positive future returns, Bitcoin offers little reliable reason to expect them. But could it make sense for investors seeking a store of value?
My three-year-old likes to put Goldfish crackers in his pocket to “save them for later.” He is often disappointed later when he pulls out a fistful of crumbs. If you want to save something for later, the thing you store it in needs to be reliable. We learn from experience that pockets may not be a reliable store for crackers, just like Bitcoin may not be a reliable store for wealth.
Over the past decade, Bitcoin’s annualized volatility has been nearly five times higher than that of the Russell 3000 Index—76.9% compared to 15.8%.1 Since its first recorded market price in August 2010, Bitcoin has taken investors on a volatile ride, with 27 peak-to-trough declines exceeding 10%, 10 declines exceeding 30%, and five declines exceeding 70%.
This data suggests Bitcoin is not a reliable way to store value. It is a way to speculate on it. And it could leave investors HODLing a fistful of crumbs.2
EXHIBIT 1
Bitcoin vs. Russell 3000 Index Peak-to-Trough Declines
August 2, 2010–December 31, 2024
Footnotes
1. Based on monthly Bitcoin and Russell 3000 Index returns for the 10-year period ending December 31, 2024. Russell data is in USD.
2. “HODL” refers to “hold on for dear life,” a commonly used phrase within the crypto community.
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