Question: What happens if you had put $1,000 into each of the following 5-years ago:
For some info about the annual yields: 5/10/30-year treasury bonds were 1.34%, 1.84%, and 2.60% respectively, a 5-year CD was 0.85%, and a checking account was 0.04%. Inflation has been around 1.8% annually since that time (although it's picking up a lot in the last 4-5 months).
First, let's look at your $1,000 investment when we don't take into account inflation.
Fig. 1 – Value of $1,000 after 5-years in each of the above investments, not accounting for inflation. Colors merely indicate groups of similar investments, e.g., all orange data labels are government bonds, while all blue data labels are cryptocurrencies.
Lemme start: LOL.
OK for real though. I could have made the y-axis logarithmic, but I think that format obscures just how well 4 of the 5 top cryptocurrencies have done since then. BTC, ETH, XRP, and LTC are all up 48x to 300x. STEEM, which was the 5th largest cryptocurrency by market cap 5 years ago, would actually be worth only about 42% of your initial investment (I'll note, STEEM was in the middle of a pump exactly 5 years ago, and if you had bought it even a month later, you'd be looking quite a bit better than the above data suggest).
However, STEEM is the only investment that actually lost value in this non-inflation-adjusted dataset. Even the lowly Checking Account (which, frankly, folks should never be using for an investment vehicle anyway), generated a $2 profit! Of the non-crypto investments, Apple and Netflix take the #1 and #2 spots, going up over 400% each.
Now, let's take into account annual inflation, which has reduced the purchasing power of your USD by about 2% annually since 2016 (and, I'll note, inflation has gone up to at least an annualized 5% in 2021 and it wouldn't surprise me if it ends up being at least 8% overall by the end of the year).
Can I get an F in the chat? The 5- and 10-year treasury bond, the 5-year CD, the checking account, and Walmart lost value over the 5 years of investing due to the inflation rate. STEEM of course dropped even lower (you'd have lost 62% of your initial investment, effectively). The 30-year treasury bond held onto a small $32 profit, while the individual stocks and S&P fund clearly were profitable, too. All the top four cryptocurrencies still look like beasts.
Now, there are some caveats here. The risk involved investing in crypto in 2016 (and even today) is much higher than investing in the very secure treasury bonds, CDs, and checking account. I would argue that the individual stock investments are still quite high-risk, although the S&P index I consider to be relatively safe (at least compared to crypto). So, if you were someone investing in a treasury bond in 2016, you hopefully did so because you just wanted to try and almost-sorta-kinda stave off inflation while having virtually zero risk of losing your principal… otherwise, there's really no excuse for you to have "staked" your money in those investment vehicles for 5 years.
Keep in mind, you know damn well you paper-handed bitches wouldn't have held your $1,000 ETH investment all the way from 2016 to 2021, whereas you would likely feel OK holding your S&P500 index fund investment over that same duration. And that's OK, I wouldn't have, either. But the point is, it's very unlikely that many if any people HODL'd $1,000 investments in these top 5 cryptos for this long, and if you did, I'm gonna make an assumption that you were already so wealthy that an extra $200,000+ didn't impact your life significantly anyway (or else, you'd probably have sold sooner).
It's also worth noting that if you look at the top, say, 20 or 30 cryptocurrencies in 2016, a lot of them are long-gone or way down in value. I picked the top 5 from August 2016 arbitrarily, but I may go back and look at the top 10, 20, 50, or even 100 and see where they'd be today. Cryptocurrency investments may not look quite so favorable in that scenario.
tl;dr: the top 5 crypto currencies on average far, far outperformed any well-known investment vehicle from August 2016 to August 2021.