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by paulpauper 1861 days ago
In terms of risk-adjusted returns, Bitcoin worse than index funds. You can get smoother returns using 3x ETFs like TQQQ and TECL compared to bitcoin and about the same absolute returns. Nasdaq 100 has much better sharpe ratio compared to bitcoin. Same for FAAMG portfolio
3 comments
DennisP 1861 days ago
When I google "Bitcoin Sharpe ratio," every article that comes up shows its ratio to be quite high.

Here's a chart comparing various assets' Sharpe ratios over time, always for the previous four years. Bitcoin's is at top of the chart, staying over 2 and sometimes over 3: http://charts.woobull.com/bitcoin-risk-adjusted-return/

The lowest I've found is in this article, calculating over the past five years a Sharpe ratio of 1.6: https://www.forbes.com/sites/baldwin/2021/03/02/how-bitcoin-...

According to this, from 2007 to 2021 the Sharpe ratio of the Nasdaq 100 was 0.97: https://backtest.curvo.eu/portfolio/nasdaq-100--NoIgcghgzgJh...

And this gives a FAANG portfolio Sharpe ratio of 1.25: https://medium.datadriveninvestor.com/3-ways-to-evaluate-the...

In terms of absolute returns, TQQQ has done well but not so well as Bitcoin. Since 2016 TQQQ has done 12X, compared to Bitcoin's 85X. Since April 2013 (as far back as Coingecko goes) TQQQ has gone up 37X, compared to a Bitcoin's 272X.

As a bonus, Bitcoin has a long-term correlation with the S&P500 of only 0.01, according to the Forbes article linked above.

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cableshaft 1861 days ago
If you're holding as long as most people do index funds (i.e. 5-10+ years), historically you would have been way better off putting that money into bitcoin. Even taking this crash into account, I'm way up on crypto compared to my 401k. Not going to stop putting money into my 401k though, for the sake of diversification.
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paulpauper 1861 days ago
The bulk of btc gains were from 2010-2013. The cagr of BTC from early 2018 onwards is not that great.
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ric2b 1860 days ago
Up 20x since 2018 is not that great?
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prepend 1859 days ago
Jan 1, 2018 BTC price was $13k. Price today is $41k.

Not 20x, that’s a little more than 3x.

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kwere 1861 days ago
leveraged etf arent an investiment veihicle
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