At this point there is very little to be gained debating the legitimacy of bitcoin as an investment asset. The institutional interest in the asset alone has ensured that it is going to attract funds and media attention for some time to come. A more important discussion is the effect of the meteoric rise in the price of the asset on the expectations of many investors when it comes to what counts as normal investment returns.

Bitcoin is up a ridiculous 336% over the past 52 weeks, 860% over the last 2 years and a mind-boggling 7,600% over the last five years. In contrast the S&P 500 SPDR ETF (basically tracking top US equities) has returned 42%, 90% and 109% over the same timeframe. (All data from barchart.com and collected on date of publication of this article.) These equity returns are the type all investors used to dream about but because of the astronomical returns generated by bitcoin and other crypto assets, a group of investors believe you’re not really seeing returns if you are not doubling your paper value every 3 months.

In his best-selling book, One Up On Wall Street, legendary fund manager, Peter Lynch, wrote about how one could find undervalued stocks that could potentially return ten times your investment (a 10-bagger). I wonder whether he can imagine an asset which is well-known and in the news all the time, is easily tradeable by anyone with a smartphone and an internet connection, and yet is expected to be a 10-bagger not once but over every two years. I bet he’d think such expectations are absurd. And so it is. Not only has bitcoin’s performance made returns from other assets look like a waste of time, it has also become a victim of its own success with people thinking that a 10-20% annual return would be a disappointment. That’s just ridiculous.

It’s about time people realize that investing in financial assets, for everyone but those who make it a full-time profession, is hardly a regular source of income and is more like a long-term vehicle to accumulate wealth. When you can no longer go to sleep because you are thinking of wild swings in your wealth then you are no longer investing, you are speculating. And if speculating is what you want to do, that is fine. But if you want to invest, it is best to bring your expectations down to a realistic level.