Bitcoin Faces Competition in Risk-Adjusted Returns: Analysis

• NVIDIA leads in risk-adjusted returns, outperforming Bitcoin and other assets.
• Meta and gold challenge Bitcoin’s historical outperformance.
• Ethereum and tech giants like Apple and Amazon underperform in returns and Sharpe Ratios.

Bitcoin’s dominance in risk-adjusted returns is facing competition, according to the latest analysis by Ecoinometrics. Even with the launch of Bitcoin ETFs earlier this year, software company Meta and even gold have caught up year-to-date (YTD), potentially threatening BTC’s number two position.

The chart analyzing the 12-month returns and Sharpe ratios of various large-cap assets highlights this trend. NVIDIA currently leads with the highest Sharpe Ratio, indicating superior risk-adjusted performance. It occupies the top-right corner of the chart, signifying both high returns and strong risk-adjusted performance.

Bitcoin, known for its historical performance, is positioned relatively high on the chart but has not made significant progress compared to NVIDIA. This suggests Bitcoin faces competition in terms of risk-adjusted performance.

The chart also indicates that assets like gold and Meta are challenging Bitcoin’s position. Meta is improving its performance on the Sharpe Ratio, and while lower on the returns axis, gold is nearing Bitcoin in terms of risk-adjusted returns.

Ethereum, on the other hand, is underperforming, with low returns and a lackluster Sharpe ratio. It is positioned in the lower-left quadrant, reflecting its less favorable performance.

Similarly, tech giants like Apple, Amazon, Google, and Microsoft are clustered in the lower-left quadrant, displaying lower absolute returns and relatively low Sharpe ratios compared to Bitcoin, NVIDIA, and Meta.

Gold, traditionally a safe-haven asset, has a moderate Sharpe ratio with lower absolute returns. This reflects its stable but less remarkable performance compared to more volatile assets like Bitcoin and Meta.

This trend underscores the shifting dynamics in risk-adjusted returns among large-cap assets. While NVIDIA leads, Bitcoin’s dominance is challenged by gold and Meta, with Ethereum experiencing a notable decline. Tech giants remain stable but do not offer the same level of risk-adjusted returns as the leading assets. Overall, this visualization highlights the evolving nature of asset performance in a volatile market environment.