However, the long-term prospects for the stock market could be more attractive than Bitcoin. Many FTSE 100 shares are trading at low valuations. History shows that investors who buy at such times gain the benefit of long-term recovery potential. This could help them retire early, particularly if they buy in a Stocks and Shares ISA, shielding their returns from tax.
Bitcoin vs FTSE 100 shares
Bitcoin could become increasingly popular with investors in the short run, due to the uncertain outlook for the economy. However, it’s impossible to ascribe an intrinsic value to Bitcoin. It just sits there, earning its owner no interest. Meanwhile, its price movements are driven by nothing more than investor sentiment.
Of course, sentiment also plays a part in the movement of FTSE 100 shares. Crucially though, shares can be ascribed an intrinsic value. After all, a share represents a part-ownership of a business. Businesses generate sales and profits, and often pay shareholders dividends.
Recovery potential of FTSE 100 shares
In the short term, FTSE 100 shares may continue to face a challenging backdrop. Although the stock market has recovered somewhat from its March lows, sentiment could deteriorate again. A resurgence of Covid-19, a deterioration in US/China relations, and a longer and/or deeper recession than currently projected are just a few of the things that could negatively impact sentiment towards FTSE 100 shares in the short term.
However, the track record of the FTSE 100 shows it has always recovered from challenging periods. Then gone on to make new record highs. Right now, I see many blue-chip companies capable of navigating the current short-term challenges. Capable of returning to their pre-pandemic levels of sales, profits and dividends in the medium term. And capable of increasing all these things over the long term.
Similarly, I see many share prices returning to pre-pandemic levels over the medium term. And the…