Cryptocurrency market data provider Kaiko Research recently released a report stating that Bitcoin has risen by over 160% in 2023. According to the Sharpe Ratio, it is the second best-performing asset this year, only behind graphics chip manufacturer Nvidia.
Cryptocurrency market data provider Kaiko Research predicted on the 21st that Bitcoin will be one of the best-performing assets this year. The Sharpe Ratio of Bitcoin is almost better than the performance of all major traditional financial assets, second only to graphics chip manufacturer Nvidia.
The Sharpe Ratio, also known as the Sharpe Index or Sharpe Value, measures the performance of a strategy adjusted for risk compared to risk-free assets. Its definition is the expected value of the difference between investment returns and risk-free returns, divided by the investment standard deviation (i.e., volatility), representing the additional return obtained by the investor for each unit of additional risk taken.
In terms of actual gains, Nvidia’s stock price has risen by over 241% this year, MicroStrategy by 327%, and Coinbase by 422%, all higher than Bitcoin’s 168% increase. In addition, Ethereum has risen by 95%, the Nasdaq Composite Index by 44%, and the S&P 500 Index by 24%.
Kaiko divided Bitcoin’s trend this year into three stages: rebound from the cycle low, stagnation in the middle of the year, and a surge at the end of the year. It pointed out that from March to October this year, Bitcoin has been fluctuating between $25,000 and $30,000, with trading volume reaching a multi-year low during the summer, and the market’s enthusiasm seems to have dissipated.
However, after BlackRock submitted its Bitcoin spot ETF application in June, Bitcoin rose from $28,000 to nearly $45,000. Therefore, although the mid-year trend was somewhat dull, Bitcoin’s Sharpe Ratio performance is one of the best among all major assets this year.
It is worth noting that Kaiko pointed out that Bitcoin is often touted as digital gold and an inflation hedge tool, but its price is often influenced by macroeconomic factors, the performance of the US dollar, and the stock market. However, since the end of summer, the correlation between Bitcoin and the Nasdaq 100 Index has started to decouple, and whether this will continue remains to be seen.
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Kaiko
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Sharpe Ratio
Bitcoin
Bitcoin spot ETF