Bitcoin (BTC-USD) has been battered for the past few months and the claim that it is a hedge against inflation severely tested.
But despite significant volatility, its backers are claiming bitcoin has outperformed leading tech stocks by an average return on investment (ROI) of 12.24% as of 13 February.
Among the stocks, bitcoin significantly outperformed Facebook-owner Meta (FB) by 46.74%, followed by electric vehicle maker Tesla (TSLA) at 18.37%, according to data from Finbold, an online platform providing market analysis.
Meta shares took a big hit last week, plummeting over 26% — the biggest single-day slide in market value for a US firm — after quarterly figures disappointed investors. The drop erased more than $200bn from the market value, and $31bn from CEO Mark Zuckerberg’s net worth.
The leading crypto also outperformed Amazon (AMZN) by 3.78%, and Google-parent Alphabet (GOOGL) at 1.84%.
Compared with Microsoft (MSFT), the crypto’s ROI was 1.95% higher. And bitcoin nearly matched Apple (AAPL), surpassing the stock by 0.76%.
In the short term it seems tech stocks market correction is making bitcoin a more attractive proposition for crypto backers.
Although bitcoin registered a higher ROI than tech stocks, crypto and stocks have largely moved in tandem.
Read more: Bitcoin in 12 charts
Finbold says that the correlation potentially points to the impact of the anticipated Federal Reserve interest rates hike and rising inflation concerns that have affected global stocks and the crypto market.
Bitcoin and tech stocks belong to different asset classes.
The tech firms are for-profit businesses with tangible products and services, while bitcoin is a decentralised virtual asset controlled and run by blockchain technology. Many still believe bitcoin to have no value in the real world.
Watch: The value of bitcoin is ‘probably zero’, says Steve Hanke
US investment bank JP Morgan (JPM) argued in a recent analysis that the crypto’s price is overvalued and pegged its “fair-value” at $38,000, around 12% below its current price.
However, senior economist Steve Hanke — a former economic adviser to the Reagan administration — explained to Yahoo Finance in an interview last year that there is difficulty in deriving a value for bitcoin.
“From a high theory perspective you end up with a bitcoin that does have a price, that is objective and we know what it is, but we don’t know it’s fundamental value and my guess is it’s probably zero,” Hanke said.
Read more: JP Morgan estimated bitcoin’s fair value
Finbold report, however, notes bitcoin is heading for maturity as it outperforms traditional stocks.
“If bitcoin can sustain the gains in the coming months, the move will solidify the asset’s status as a maturing investment vehicle,” Finold said. “The maturity will also be aided by the continued entry of institutional investors into the space.”
The economic impact of the COVID pandemic saw investment in cryptocurrency grow. Several companies like Tesla, CoinBase (COIN) and Block Inc (SQ) have collectively purchased hundreds of millions of dollars worth of the crypto.
Tesla revealed the value of its bitcoin holdings stood at $1.99bn (£1.5bn) at the end of last year.
The electric vehicle maker, which invested $1.5bn in bitcoin last year, said it registered about $101m in impairment losses in 2021 due to a decline in the value of the cryptocurrency. However, it made $128m after selling a portion of its holdings in March.
Founder Elon Musk has been a vocal proponent of crypto assets such as bitcoin and briefly accepted the crypto as payment for Tesla merchandise.
He has since reversed this policy, citing environmental concerns about bitcoin mining.
Watch: What are the risks of investing in cryptocurrency?
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