Bitcoin (BTC) is commonly perceived as risky, but it has nonetheless produced the highest returns when compared to traditional assets. Binance Research has compiled the data to compare its yield to risk ratios.
Binance Research has just released new charted data that displays how Bitcoin has trumped any other traditional assets. This is true even when risk indicators and its ratios are calculated into the equation.
Overall, the figures go against any naysayers who continue to claim that Bitcoin is far too risky to be taken seriously.
Bitcoin: 396 Percent Gains
If we ignore relative risk, Bitcoin’s surface-level yields are astronomically high. For example, in the past two years, the market leader has appreciated 396 percent. Tech stocks, the second-best performing asset class, only appreciated some 46 percent during this same time.
When risk variables are factored in, Bitcoin still looks strong. Binance Research has crunched the numbers to produce Sortino ratios for BTC and other traditional asset classes.
The Sortino ratio measures risk-adjusted returns, penalizing an asset for harmful volatility below a threshold. Based on the Sortino ratios, the first and foremost cryptocurrency still outperforms all other traditional assets (283 percent), with tech stocks coming in second again with 190 percent returns.
Despite its perceived riskiness, Bitcoin $BTC has provided far higher returns than most traditional assets over the past 2 years based on the following risk indicators/ratios. pic.twitter.com/yXVKpcNvTO
— Binance Research (@BinanceResearch) May 15, 2019
BTC vs. Traditional Assets: Sharpe Ratios
Binance Research has also calculated Sharpe ratios for these same assets, with BTC edging out the others only slightly. The Sharpe ratio is similar to the Sortino ratio but incorporates all volatility, not just below a certain threshold. With this metric, Bitcoin stands at 117 percent with tech stocks at a close 116 percent in risk-adjusted returns.
Traditional investors who still stubbornly doubt the longevity of BTC will likely continue to say it is overly risky. However, as Binance Research shows, compared to any other traditional asset BTC has been exceptional in its yields. Perhaps in the coming years, opponents of cryptocurrencies will come around to accepting these investment vehicles as the data becomes more and more undeniable.
Do you believe that BTC will continue to outperform traditional asset classes? Let us know your thoughts in the comments below.
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