- Bitcoin’s Sharpe Ratio was higher than Gold’s and that of other key equity and commodity markets
- Bitcoin’s 30-day realized volatility in the first week of April was the highest since late 2022
In simpler terms, Bitcoin, the world’s leading cryptocurrency, has given better risk-adjusted returns than standard financial assets despite its reputation for significant price fluctuations.
The best investment option currently?
Based on information from cryptocurrency market data supplier Kaiko, Bitcoin’s Sharpe Ratio surpassed that of gold and major equity and commodity markets around early April.
The Sharpe ratio is a popular finance measurement that evaluates an asset’s return in relation to the risk it carries. In simpler terms, it determines how well the asset has performed compared to the market risk it was exposed to – taking into account both its gains and losses.
Normally, a Sharpe ratio of 1 or more signifies a decent risk-adjusted return. However, as shown in the given graph, Bitcoin’s Sharpe ratio hovers near four.
High volatility, but higher returns
In the opening week of April, Bitcoin’s 30-day volatility reached its peak since the end of 2022. Surpassing the volatility levels of assets like Gold during this period, it indicated that despite price fluctuations, Bitcoin remained an appealing investment choice.
Bitcoins price has risen approximately 60% since the start of 2024 and more than quadrupled from its bottom during the 2022 market downturn. Currently, it is hovering near its peak of around $67,000, with numerous experts forecasting a robust uptrend in the upcoming months.
Having a greater expected return, considering risks, is a good sign for the future popularity of the most widely used cryptocurrency. This trend is starting to become apparent as well.
In summary, based on Glassnode’s data analyzed by AMBCrypto, there has been a significant increase in the number of Bitcoin wallets holding a balance in recent years. This growth suggests that investors have faith in Bitcoin’s future value.
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2024-04-10 20:07