BTC holders’ 104% CAGR dwarfs ‘steady growth’ portfolio

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Comparing Bitcoin’s (BTC) compound annual growth rate (CAGR) with the returns achieved by Warren Buffett’s portfolio — with its top holdings being Apple, Bank of America, American Express, Coca-Cola and Chevron Corp — shows starkly different risk-reward profiles and performance over varying timeframes.

Warren Buffett’s portfolio: Less risk, same gains as stocks

For instance, according to the data resource Lazy Portfolio ETF, Warren Buffett’s portfolio has obtained a 10.03% CAGR with a 13.67% standard deviation in the last 30 years. In comparison, United States company stock portfolios have more or less offered similar returns but with a higher standard deviation.

Warren Buffett’s portfolio vs. U.S. stocks portfolio. Source: Lazy Portfolio ETF

In other words, the Oracle of Omaha’s portfolio has returned impressive results despite being less volatile or risky than U.S. stock portfolios. His investment philosophy emphasizes long-term value investing, prudent risk management and a preference for fundamentally strong companies.

Bitcoin beats Buffett’s risk-averse portfolio

By comparison, Bitcoin’s performance has been nothing short of extraordinary. Since its trading debut in 2011, Bitcoin has delivered a staggering average annual return of around 104%. This figure easily beats the returns of Buffett’s and U.S. stock portfolios every year, on average, over the past 13 years.

Bitcoin’s annual returns. Source: Curve.eu

Bitcoin’s CAGR is also much higher than its safe-haven rival, gold, which has returned an average of 6% annually in the same period. This shows that while U.S. stock portfolios have achieved a comparable CAGR to the Buffett portfolio, its higher volatility might make it unsuitable for risk-averse investors.

Gold, with its modest 6% average annual return over the past decade, offers relative stability and acts as a hedge against economic downturns.

Gold’s average annual return performance chart. Source: Curve.eu

Many traders and investors regard Bitcoin as “digital gold,” viewing it as a hedge against inflation and currency devaluation.

This perception has enhanced its appeal as an asset over the years. Notably, several U.S. companies, such as MicroStrategy and Tesla, have added Bitcoin to their reserves, followed by the launch of spot Bitcoin exchange-traded funds (ETFs) that have further solidified its status among institutional investors.

Spot U.S. Bitcoin ETFs cumulative inflows. Source: Farside Investors 

That said, Bitcoin remains highly volatile, with its price subject to extreme fluctuations, when compared to the stable returns of Buffett’s portfolio. In recent years, however, Bitcoin has exhibited lower volatility than many S&P 500 stocks, including Tesla, Meta and Nvidia.

Related: Warren Buffett’s Berkshire Hathaway did crash 99%… against Bitcoin since 2015

The Buffett Portfolio represents a more conservative, long-term strategy with consistent returns and manageable risk, even though it has exposure to a pro-crypto neobank in Nu Holdings.

In contrast, Bitcoin has provided much higher returns, albeit with significant volatility and several big downturns over the past 13 years.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.