Bitcoin’s price return ‘stands apart from the crowd’ According to NYDIG

Bitcoin continues to dominate as the top-performing asset in terms of returns, despite its notorious volatility, according to a report from the New York Digital Investment Group (NYDIG).

In an analysis published on October 11, Greg Cipolaro, NYDIG’s global head of research, emphasized that Bitcoin “stands apart from the crowd” when it comes to performance. Cipolaro compared Bitcoin’s returns to those of other asset classes using the Sharpe ratio, a key financial metric that evaluates an asset’s return relative to its risk. The higher the Sharpe ratio, the better the asset’s risk-adjusted return.

Cipolaro’s analysis presented Sharpe ratios for various assets, such as stocks and bonds, over different time frames. The rolling Sharpe ratios were calculated using monthly returns, allowing for the most up-to-date comparison.

According to Cipolaro, Bitcoin consistently ranks among the top asset classes in nearly every metric and across all time periods. While gold had a slightly higher Sharpe ratio over the past year, Cipolaro pointed out that the difference was minimal, describing it as “splitting hairs.”

His findings also countered a note from Goldman Sachs on October 7, which suggested that Bitcoin’s 40% year-to-date gain wasn’t enough to outweigh its volatility. Cipolaro argued that the data shows the opposite, stating, “The risks Bitcoin investors face, like price fluctuations, are more than compensated for by the returns.”

However, Cipolaro cautioned that while the Sharpe ratio is useful for comparing risk-adjusted returns, investors ultimately care about absolute returns to meet their financial goals. He also noted that the Sharpe ratio doesn’t account for all risks, such as potential asset seizures or censorship.

Earlier in October, NYDIG analysts confirmed that Bitcoin remains the best-performing asset of 2024 so far, despite experiencing a weaker-than-usual third quarter.

As of October 13, Bitcoin remained relatively stable, trading around $62,560 after reaching an intraday high of $63,150.

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