When most investors decide to take on a higher risk profile than just investing in broad market index funds, a common first step is to look into individual growth stocks, such as Apple. When they feel prepared to take another step on the risk ladder, they often move away from stocks and turn to cryptocurrency and its most notable emblem, Bitcoin.

The choice between these two high-performing assets can be difficult for investors who are new to choosing individual assets, including cryptocurrency, especially in times when the economy looks uncertain.

As such, in this article, we’ll take a look at the market data to compare Bitcoin to Apple stock to help you decide which one is the right investment for you.

What are Apple and Bitcoin?

While some of you might already be familiar with these investments, we also understand that for many people, this is their first time investing in cryptocurrency or the stock market. Therefore, we’ve decided to cover the key points about each of these projects.

Apple (AAPL)

apple stock 2022 iphone 13 pro screenshot investing

Co-founded in 1977 by Steve Jobs and Steve Wozniak, the tech giant, Apple Inc. (AAPL) trades on the Nasdaq stock exchange. It owns an enormous part of the market share since it is the largest publicly traded company in the world. As of writing this article, the price of AAPL is $168.64.

apple stock historical performance investing 2022

In 2021, the data shows that Apple’s stock had strong financials. It grew by 37.22% and it outperformed the S&P 500 and Nasdaq by roughly 8%.

Back in 2018, Apple Inc. broke records by becoming the first publicly traded U.S. company to reach a $1 trillion market cap. 2 years later, they broke their own record by being the first to reach a $2 trillion valuation. In January 2022, Apple once again separated itself from other companies, including Meta Platforms and Microsoft, bypassing the $3 trillion market cap.

Apple produces smartphones, computers, tablets, and other famous products and services in the technology industry. The company’s most famous products that you probably know are the iPhone, Mac, iPad, and even newer accessories, such as the Apple Watch and AirPods.

One of the reasons the company is valued so highly is because it makes popular products and has excellent profit margins with data to back it up. For instance, in the first quarter of 2022, Apple’s gross margin is already at 43%.

Note: What’s a gross margin? Gross margin is a financial metric that takes the difference between a company’s revenue and its cost of goods sold and then expresses this number as a percentage of total revenue.

Bitcoin (BTC)

bitcoin physical representation investing facts

Created in 2009, Bitcoin is a decentralized digital currency and the largest cryptocurrency by market cap and by far the most famous. As of writing this article, its cost is $42,512.46.

Bitcoin historical investing performance 2022

Last year, Bitcoin increased in value by over 57%. This represents a 20% return over Apple shares during the same time period.

As opposed to Apple’s publicly known founders, the identity of Bitcoin’s founder remains a mystery since its inception. All that is known is that their pseudonym was Satoshi Nakamoto and they wrote the white paper, an informational document to promote or highlight the features of the first cryptocurrency.

Unlike traditional currencies, Bitcoin is created, distributed, traded, and stored on the blockchain, which is a digital ledger of permanent, public, and transparent transactions. This means that any transaction made on the network can be traced to a particular wallet address.

Satoshi Nakamoto initially designed Bitcoin as a response to the 2008 financial crisis to avoid traditional financial systems. However, since then, the narrative around the coin has changed. In general, the benefits of owning cryptocurrency have become more and more obvious.

What is so Great About Bitcoin?

Today, the argument in support of Bitcoin claims it builds and improves upon the flaws of fiat in a number of ways. First, it generally offers lower transaction fees than traditional online payment services, especially if you’re moving large amounts of money. In fact, apart from a sudden spike in fees during April 2021, Bitcoin transaction fees have remained at around $2 since July, as you can see below.

Secondly, Bitcoin fees do not change based on the size of your transaction, you will pay $2 whether moving $10 or $10,000,000, making it very attractive as a way of moving value.

bitcoin transaction fees investing consideration

Thirdly, it offers a completely decentralized, trustless system, unlike that of government-issued currencies.

Lastly and possibly most importantly, this cryptocurrency can act as a store of value and a hedge against inflation because it has a maximum total supply of 21 million coins. Once all have been mined, no more can be created. This is in stark contrast to fiat currencies, like the US dollar, which can be printed as needed. However, printing more money, when there isn’t more production, can cause prices to rise dramatically and the value of a currency to drop.

In fact, in early 2022, with inflation rates at 7.5%, their highest in 40 years, the case for Bitcoin and other hedges becomes a lot more compelling. In another article, titled ‘Should you invest in cryptocurrency in 2022?‘ we argue whether this is a good decision or not.

Historical Performance: Apple vs Bitcoin

When deciding whether to invest in or begin trading Apple or Bitcoin, historical performance can be a way to get a general idea of their growth. This is not a sign that the assets will continue to perform this way in the future. Nonetheless, it does provide retail investors with a starting point to evaluate their potential earnings.

bitcoin percentage growth over time investing

Over the past 5 years, Apple’s shares have shown gains of more than 410%, which is an incredible return for any asset during that time. This increase in price is great news for Apple investors over the last half-decade, especially considering that the S&P 500 “only” returned around 88% over the same time period.

However, Apple’s strong performance pales in comparison to Bitcoin. In the last 5 years, Bitcoin has increased by more than 4000%! In other words, if you had invested $1,000 into Bitcoin in 2017, today you would have $40,000.

Deciding Between Investing in Apple or Bitcoin

By now, we hope you have a pretty good idea of what Bitcoin and Apple’s are and how they have performed historically. However, to help you make a better-informed decision about which to invest in, an excellent strategy is to evaluate the advantages and disadvantages of each. Consider the following options.

Apple Stock: Pros and Cons

Pros

Tax advantages: If you happen to live in a country with tax-sheltered or tax-advantaged accounts (i.e. Roth IRA, 401k, ISA, TFSA, RRSP, etc.), investing in Apple and the stock market is a good idea. By using one of these accounts, you can increase your capital while at the same time avoiding or postponing paying taxes on your gains. This means you don’t miss out on any of your full earnings!

Stock market-leading growth: While its future performance is not guaranteed, Apple has handily outpaced both the S&P 500 and the Nasdaq since its inception. It is quite possible that the world’s largest company maintains its lead over the markets in this area.

Less volatility than Bitcoin: Given its world-leading reputation and enormous market cap, Apple is by nature much less volatile.

Cons

Less growth potential than Bitcoin: Apple’s larger market cap also works against it. This means that it is less likely to outpace Bitcoin’s growth. In addition, stock market investors’ risk profile is usually much lower than that of crypto investors. In other words, they expose themselves to lower risk, but also lower rewards than in Bitcoin’s arena.

Bitcoin: Pros and Cons

Pros

Potential for massive growth: Bitcoin’s smaller market cap, speculative ecosystem, and limited supply could all signal that there is a lot of growth ahead for Bitcoin. As institutional investors, such as Tesla, MicroStrategy, and even governments like El Salvador, begin to add Bitcoin to their balance sheets, one could argue that it is poised for reaching newer all-time highs much quicker than Apple. If historical performance is any indicator, Bitcoin will likely experience more rapid growth over the short and long term.

24/7 liquidity: Bitcoin is a far more liquid asset (trading 24/7) than anything on the stock market, which only trades Monday to Friday between 9:30 a.m. and 4 p.m. Eastern Standard Time (UST-5)

Electronic payment system: It can be used as a payment system in addition to an asset one invests in.

Store of value: While it is still a very volatile asset, it is possible that in the future Bitcoin could become a functional store of value, as mass adoption of cryptocurrency continues to spread.

Opportunity for earning interest: Lastly, what we consider a huge benefit of Bitcoin is the fact that you can earn interest on it just for holding it. This is not possible when holding Apple shares (though they are dividend-paying). Thanks to centralized exchanges and lending platforms, such as Kraken, you can earn a previously-agreed yield on your Bitcoin.

Exposure to the entire crypto market: In a similar way to index funds, Bitcoin acts as a proxy for all other cryptocurrencies, which provides investors with exposure to the broader market. As the leader in this industry, this coin benefits from not having as extreme price swings as other smaller coins.

Cons

Young market with lots of volatility: When it comes to Bitcoin’s downsides, there are a few things to consider. Bitcoin and the crypto market as a whole are in their infancy. Having been around less than 15 years, this means that this still remains a highly speculative space. As such, volatility and sudden crashes of more than 30% over a short period of time are to be expected.

Lack of regulation: In addition, cryptocurrency regulations are yet to be instituted in all countries. The United States, for example, has not provided clear legislation on Bitcoin and other cryptos. While in the long-term regulation is a positive and necessary aspect, in the short-term it is likely that the crypto market will react negatively to the introduction of new taxes or other types of governance rules.

Inefficient speed and environmental impact: When compared to other cryptocurrencies developed as payment systems, Bitcoin is inefficient, both in terms of transaction speed and its environmental impact from mining. (Read our sustainability report here)

Coin Clarity’s Recommendation

If you’re currently considering whether you should park your funds in Bitcoin or Apple, this is a completely personal choice. Ultimately, it will depend on your risk tolerance as an investor.

However, if you’re already at the point where you’re thinking of investing in cryptocurrency, Bitcoin is likely your best bet at having a relatively safe asset, while at the same time outpacing stock market returns, including Apple’s. In our opinion, the massive benefits greatly outweigh any disadvantages.

As many analysts have shared, if you have a long-term outlook, crypto’s short-term volatility could be well worth the wait for incredibly high prices and valuation years down the line. 

Furthermore, lately, the stock market and crypto market have shown a stunning correlation. This means that generally speaking, any major positive or negative news affecting the stock market, such as inflation concerns in 2022, will also affect the crypto market.

Bitcoin and other coins, however, will have more dramatic swings, which means more volatility, but also a much higher reward. Understanding this information can be a very useful tool to up your game as a retail investor.

While security is often the main concern when investing in Bitcoin and other cryptos, relying on a centralized exchange can be an excellent way to deal with an organization similar to a bank or stockbroker like you would in traditional finance.

For that reason, at Coin Clarity, we recommend investors use only the best-centralized crypto exchanges, such as Gemini, Coinbase, and Binance (or Binance.US if you’re in the States). They are all industry leaders in terms of safety and customer support, and provide great trading and earning opportunities.