Long term views are pretty much all bullish. That is aside from Peter Schiff who has reportedly just lost his stash due to a software error, not a bitcoin error as he likes to proclaim. Looking at January, it has been the worst month of the year for BTC over the past 5 years with an average performance of Could you be next big winner? I consent to my submitted data being collected and stored. The past few weeks have been hard on crypto bulls, as Bitcoin and the broader crypto market continued to sell off. This week the crypto market went nuts when Elon Musk revealed his company began accepting Bitcoin as a form of payment for any Tesla model.
While this caused prices to initially soar All Rights Reserved. We begin by reviewing cryptocurrency returns for the year of in table form see Chart 1. The horizontal bar chart provides both an analog and digital view of the enormous monthly returns and risks associated with the various cryptocurrencies.
The SP risk-return performance is also included as a source of contrast. Note how each of the cryptocurrency measures of return and risk massively exceed those the SP index for the year Cryptocurrency Risk-Return Performance: A different visual of the risk-return tradeoff across the various cryptocurrencies and the SP is presented in the form of a line graph see Graph 1. As expected, there is a positive relationship between risk and return, with cryptocurrencies displaying higher monthly returns also carrying higher standard deviations of monthly return i.
This graphic also depicts how the cryptocurrencies dominate the SP in terms of massively higher return and risk values. Major Cryptocurrency Risk-Return Pattern: Another contrast and sense of scale is obtained by comparing returns across different investment classes.
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For this purpose, we restrict our review to the four largest cryptocurrencies, the four largest conventional currencies, and the SP stock index. Chart 2 presents the mean monthly returns and standard deviations of return for the calendar year for selected investments across different investment classes.
Again, note how the risk and return measures for the cryptocurrencies dwarf those of other conventional currencies, as well as those of the SP For the sake of a brief, but more focused and isolated contrast, consider the returns and standard deviations of return solely on the Bitcoin, the British Pound, and the SP below for While the Bitcoin return is roughly 17 times that of the SP, its risk in terms of the standard deviation of monthly return is also commensurately higher.
Note that the SP and the British pound are relatively sedate investment alternatives when compared to the Bitcoin, and the Bitcoin is the most conservative investment alternative among the cryptocurrencies.
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The relationship between risk and return across these investments in different asset classes can be displayed in the form of a line graph see Graph 2. Again, observe the positive relationship between risk and return.
Moreover, note that the positive risk-return relationship is clearly present within the cryptocurrencies themselves, with the most well-known cryptocurrency, the Bitcoin, demonstrating the least volatility and lowest average return among the cryptocurrencies displayed. The potential sustainability of the risk-return pattern offered by cryptocurrencies is examined by observing a longer period of performance.
The risk and return of cryptocurrencies, conventional currencies, and the SP stock index are presented for a 3-year period, — refer to Chart 3. Since the Bitcoin BTC and Litecoin LTC were the only cryptocurrencies trading throughout the — time period, only these two cryptocurrencies are included in this long-term performance compared to more conventional investments. Investment monthly performance: Note that while the differences in performance between cryptocurrencies and other investments for this 3-year period are somewhat less striking than for the explosive year , there still exists an enormous performance gap.
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Returns on the two cryptocurrencies BTC and LTC are roughly 10 times those of the comparative investments, and likewise, the levels of risk i. The long-term performance contrast is also presented in the form of a line graph see Graph 3. Note that the two cryptocurrencies BTC and LTC display risk and return values that are high multiples of those of the SP or conventional currencies. Monthly performance: Whether examining performance for the explosive year , or for a longer period, cryptocurrencies offer another alternative to investors that involves considerably higher risk and commensurately higher return than typical of conventional investments.
Compared to the high average returns and standard deviations of return of cryptocurrencies, investment in conventional currencies or the stock market SP appears relatively sedate by comparison. ET by Greg Robb. ET by William Watts. Robinhood plans hiring spree for cryptocurrency operation Mar. How bitcoin is like Tesla and here to stay, but will feel volatility from this unique effect, says Deutsche Bank Mar.
ET by Jack Denton. Bank of New York Mellon invests in crypto startup Mar. ET by Alexander Osipovich.
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