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Study: Despite Perceived Riskiness, Bitcoin Has a Higher Risk-Return Ratio Than Most Traditional Assets



It is no secret that a hallmark of Bitcoin and all crypto markets is that they are volatile and go through the main price cycles at a rapid rate that limits investment in nascent technologies for the bravest.

Despite this, recently published research indicates that Bitcoin actually has a risk-return ratio much higher than most traditional major assets, which may provide some comfort to crypto investors who fear that the increase in Volatility leads to potential losses in the future.

Bitcoin (BTC) increases to year-to-date highs in the midst of a broad market recovery

It is important to bear in mind that the positive risk-reward relationship that Bitcoin has compared with other assets has been driven to a large extent by the massive price increase in the cryptocurrency that it has incurred since its inception, which has caused BTC be a niche technology to a major investment. asset that is being closely watched by retail and institutional investors alike.

In 2017, the increase of Bitcoin to almost $ 20,000 highs put the cryptocurrency on the radar of the world, and the subsequent drop served as testimony of the great volatility of cryptography, despite its promising use cases and its enormous potential to long term.

This crash, which sent the cryptocurrency to $ 3,200 minimums at the end of 2018, left a bad taste in the mouth of many investors, and seems to have confirmed the negative biases of many Bitcoin economists and bears who scorned technology for a large number of investors. reasons

Despite this, in recent weeks, Bitcoin has recorded a strong recovery that has allowed it to establish new highs so far this year around the $ 8,300. This latest wave has significantly changed market sentiment and has led many investors to believe that the next bull trend is just around the corner.

Despite massive price instability, BTC has a much better risk-reward ratio than most traditional assets

Recent research on the exchange of cryptocurrencies Binance's research arm highlights the historical performance of Bitcoin, as well as the way in which the volatility of the cryptocurrency is justified by a high risk-reward ratio.

"Despite its perceived risk, Bitcoin $ BTC has delivered much higher returns than most traditional assets in the last 2 years, based on the following risk indicators / ratios," Binance Research explained in a recent tweet.

The graphs in the previous tweet clarify some interesting statistics regarding the performance of BTC in comparison with other important assets, which show that Bitcoin's 2-year yields of almost 400% greatly exceed that of technological stocks (46% ) and that of aggregate US stocks. Market – 30%.

Furthermore, while the volatility of the different asset classes is weighed using the Sortino Ratio, which is used to measure the positive volatility of an asset, Bitcoin has a positive measure of 283%, while technological stocks have a positive rating of 190% and The aggregate US stock market has a positive rating of 136%.

In considering this data, it is evident that Bitcoin is firmly in a long-term uptrend, despite the bear market that has occurred since the end of 2017, and that it is likely to extend this momentum upwards as it continues to grow older. adoption levels. It involves investments from more institutional groups.

Featured image of Shutterstock.




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