Bitcoin’s Sharpe Ratio Signals Balanced Risk-Reward

Bitcoin's Sharpe Ratio, standing at +0.97 over the last five years, presents a notable observation. Despite Bitcoin's well-known volatility, this ratio indicates that the asset has provided a nearly balanced exchange between risk and excess return over the risk-free rate.

The Sharpe Ratio at this level suggests that the returns gained have been roughly commensurate with the risk investors take, even in the face of the unpredictable nature of digital asset markets.

In comparison to other investment categories, Bitcoin is positioned towards the upper end. This indicates a superior risk-adjusted performance.

Regarding the S&P 500, Bitcoin shows a correlation of +19%. This implies a reasonably weak association with the SPX, not significant enough to be considered strong.

This suggests that while Bitcoin exhibits some synchronized movement with the U.S. equity market, it still maintains substantial independence in its price movements…