Bitcoin: A Crumby Way to Save for Later

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

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Exhibit 1

Bitcoin vs. Russell 3000 Index Peak-to-Trough Declines

August 2, 2010–December 31, 2024

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This article originally appeared in Above the Fray, a weekly newsletter for Dimensional clients. It was not created, written, or produced by TwoTen Planning.

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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