Bitcoin Is Flat for Five Years While the Nasdaq Sits Near Highs — Why Recency Bias Is Dangerous
Bitcoin Is Flat for Five Years While the Nasdaq Sits Near Highs — Why Recency Bias Is Dangerous
On the illusion that "just buying the index is easy"
When the market goes up every day, people say: "Investing is easy — just buy index funds." Over very long stretches, that's broadly true. But in between, there are five-year windows where even an asset with a phenomenal track record gets absolutely crushed. Today I want to walk through why that recency bias is so dangerous.
Point 1 — Bitcoin: five years held, nominally flat, real loss
If you bought Bitcoin in 2021 and held to today, you're roughly flat in nominal terms. Ethereum is worse. That's over five years.
The real pain starts when you factor in inflation. Think about how much prices rose over this window — a little more than nothing, right? So on an inflation-adjusted basis, Bitcoin is much worse. You held passively for nearly six years and lost significant real money. To be fair, over its entire history Bitcoin has still massively outperformed the S&P 500 — but windows like this still exist.
I'm not trying to criticize crypto investors. Everyone makes mistakes; everyone makes bad calls. What I'm trying to show you is something else.
Point 2 — the same thing can happen to the Nasdaq, gold, and silver
The same thing can happen in the Nasdaq, in gold, in silver. Gold could sit in a range for ten years. The Nasdaq could be at the same level in five years that it is today. You can never say never in trading and investing — that's exactly what makes this hard.
Point 3 — Bitcoin vs the Nasdaq: why only one is dying
When inflation rises, risk assets are sensitive to it. That's why Bitcoin got pushed down to its lows for the year, around $60,000. So why is the Nasdaq not far off its highs?
The Nasdaq has a unique story right now — the same reason stocks have been so strong for three years: AI, data centers, and the excitement about replacing employees with AI agents. The market is still very much in that hype mode.
| Bitcoin | Nasdaq (semiconductor-led) | |
|---|---|---|
| Current position | Lows of the year (~$60K) | Not far off highs |
| Hype role | No longer the exciting asset | AI/semis absorb the hype |
| Inflation sensitivity | Very high (risk asset) | High, but offset by the AI narrative |
The semiconductor ETF SMH tracks names like Nvidia, AMD, and Micron, and these stocks are hot thanks to feverish AI demand. The "exciting meme/hype asset" role Bitcoin once played has moved over to semiconductors and space stocks.
Point 4 — so where I stand on the Nasdaq
I think the Nasdaq is due for a pullback. But I'm not short, and I'm not willing to short yet. Last week I said I'd be interested in shorting indices on a price breakdown, but I'm not there. Right now I'm very much neutral.
By EdgeFinder's scoring, the Nasdaq is at a +3 — a mixed read with no clear reason to go long or short. Still, some of the hype could deflate in these indices, and those resets can be painful. The Nasdaq can have very sharp corrections; we just haven't seen one in a couple of months, so people forget. For context, when the Fed got serious about fighting inflation in 2022-2023, the Nasdaq fell roughly 38% peak to trough — and the economy actually held up fine. What the Nasdaq hated was high rates themselves.
Wrap-up: a track record doesn't guarantee the future
Just because an asset has produced phenomenal alpha up to this point doesn't guarantee the next five years. Guard against recency bias and take positions for your own reasons. That's the single most important safeguard I set for myself watching markets every day.
This is for informational purposes only and is not financial advice.
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