Bitcoin Is Safer Than Other Asset Classes As Long-Term Investment

One of the fronts Bitcoin is engaging with is demonstrating that, as an asset it is beneficial and fruitful one to invest in. The contention is the digital currency is unstable for a long haul venture. In any case, a tweet from Nick Szabo shows that Bitcoin’s Risk-Adjusted Returns far exceed other famous assets over four years.

Szabo has tweeted a diagram showing that Bitcoin towers over US Real Estate, US Stocks, Oil, Bonds, Gold and emerging currencies in the form of risk-adjusted returns by using the Sharpe Ratio, which shows investors the return of an investment as compared to its risk. The ratio is the normal return earned in excess of the risk-free rate every unit of total risk.

The graph gives the conclusion that though BTC is an unstable cryptocurrency, yet it has a higher risk, its performance outweighs risking more than conventionally safer assets like Real Estate and Gold.

Riding Bitcoin’s Volatility

For Bitcoin, it has been a double-edged sword. No doubt that its upward volatility via 2017 thrust it into the mainstream and help a lot of financial specialists take note of the gains that they could gain by holding onto it. Besides, many investors in the 2018 bear market were made to think twice as the lows scared the investors.

In any case, as Nick Szabo points out, Bitcoin proves itself as an asset worth investing in as the risk from the volatility is outweighed by the massive returns. The only assets which come near to matching BTC in the Sharpe Ratio are real estate and stocks. Yet, they never intersect the digital currency going back to the end of 2013.