Bitcoin has been a better investment over the past five years than all but one of the Magnificent Seven stocks.

The Magnificent Seven stocks have gained a lot of attention over the past year as investors have rekindled their fascination with tech and growth stocks. There’s good reason to be excited. These stocks make up some of the best stocks on the market.

They will also greatly benefit from the advent of artificial intelligence (AI). The Magnificent Seven is alphabet, Amazon, apple, meta platform, microsoft, Nvidiaand tesla.

But as great as these tech stocks have been over the years, Bitcoin (BTC -0.28%) It remains a great investment over the past five years. During that period, it generated an impressive return of over 1,500%. And only one Magnificent Seven stock performed better over that period.

Bitcoin was a better deal than 6 of the Magnificent Seven

The only Magnificent Seven stock to outperform Bitcoin over the past five years is Nvidia, which has become synonymous with the AI ​​boom. The company has been at the forefront of AI-related growth, with its data centers and AI chips playing a pivotal role in the transformation of many businesses looking to take advantage of the latest trends in technology.

However, when compared to all other stocks in the Magnificent Seven, Bitcoin easily outperforms them by far.

NVDA data by YCharts.

Why is Bitcoin such a popular investment?

A big reason why Bitcoin has done so well is that it had a relatively low starting point five years ago. It was trading at less than $4,000 in early March 2019. Yesterday, it reached a new record, $69,171.

Five years ago, the digital currency was emerging from the 2018 crash, but it took the meme hype of 2020 and 2021 for its valuation to get back on track. Investing in assets at lower valuations can give investors greater upside potential over the long term. The trade-off is that there is usually a lot of risk involved, which is why they trade at low prices in the first place.

However, as investors have become more optimistic about the future of cryptocurrencies, with some treating them as haven-like assets (such as “digital gold”), their prices have declined. It skyrocketed. And the anticipation and eventual launch of the Spot Bitcoin Exchange Traded Fund has created an even more bullish atmosphere in the crypto market over the past year.

Five years ago, most of the Magnificent Seven’s stocks had market caps of more than $100 billion. The two exceptions are Tesla and Nvidia, which have also been the best-performing stocks in the group since then.

Is Bitcoin still a good investment?

The challenge with investing in Bitcoin is that it is a highly speculative investment and it is difficult to predict what its valuation will be in a year or two. While many optimists think the stock could reach $1 million, regulators could impose restrictions that could hurt growth prospects and cause valuations to fall further.

Given the volatility surrounding cryptocurrencies, it’s not an investment I feel comfortable holding. And unless you’re willing to accept the high risk involved in investing and the possibility of losing all or most of your money, it’s still best avoided.

While there are catalysts that could cause digital coins to rise in value this year, such as the Bitcoin halving, investors are buying into the hype as cryptocurrencies have crashed before and could crash again. You need to be careful not to get caught.