- Bitcoin’s CAGR dropped to 26% in 2023, marking the lowest rate since the bear market of 2018.
- Bitcoin maintained an impressive 110% CAGR since 2017.
- Speculation about a U.S. recession raises questions about Bitcoin’s near-term prospects.
The year 2023 has revealed recessionary figures and has emphasized the presence of a bear market. One of those figures is Bitcoin’s Compound Annual Growth Rate (CAGR), which has dwindled to an average of 26% for the year.
The compound annual growth rate (CAGR) is one of the most reliable methods for calculating and determining returns for anything that may rise or decline in value over time. Hence, CAGR stands as a metric for evaluating how various investments have done over time.
According to Ecoinometrics, a platform that provides insights on Bitcoin and digital assets from a macroeconomic perspective, this CAGR of 26% represents Bitcoin’s lowest point since the bear market of 2018. As the digital asset grapples with a significant downturn, Ecoinometrics’ data suggests that 2023 could be the toughest bear market on record.
Now since 2017 Bitcoin still has an average CAGR of 110% over a 5-year rolling window.
— ecoinometrics (@ecoinometrics) September 4, 2023
That’s a very high number and there is still a lot of gowth potential left in BTC.
But if the US is heading towards a recession you aren’t going to see those return in the near future.
Bear…
However, research shows that since 2017, Bitcoin (BTC) has continued to maintain an impressive average CAGR of 110% over a rolling 5-year window. This substantial figure highlights the enduring growth potential that Bitcoin retains despite the current challenges. Reflecting on the remarkable CAGR history of Bitcoin, Ecoinometrics tweeted, “That’s a very high number and there is still a lot of growth potential left in BTC”.
Yet, speculation about a looming economic recession in the United States raises questions about the near-term prospects for Bitcoin’s returns. In the face of a recession, the Federal Reserve has generally chosen to cut interest rates in order to spur economic activity by promoting borrowing and investing.
It is crucial to emphasize that bear markets, while challenging, present unique opportunities. During these periods of recession, investors often seek out investments that have the potential to give them more rewards compared to the risks they take. These opportunities are not always easy to find in the bull market.
Bitcoin has periodically shown a negative correlation to traditional markets, implying that it could provide some measure of diversification during market downturns. However, the crypto market carefully follows the Federal Reserve’s interest rate choices, as these decisions determine the market’s direction.
Further, Ecoinometrics pointed out how the trajectory of Bitcoin’s CAGR in 2023 showcases the evolving landscape of cryptocurrency markets. While the current bear market conditions may give pause, they also pose as an opportunity moment for strategic investment decisions.
