$4.5 trillion Fidelity says Bitcoin’s risk-reward is ‘in a different universe’

Fidelity Investments is one of the largest asset managers in the world, with $4.5 trillion in assets under management. Recently, Jurrien Timmer, Fidelity’s Director of Global Macro, published a risk-reward analysis on different assets, including Bitcoin (BTC).

According to Timmer, Bitcoin’s risk-reward is “in a different universe”, as reported by Bitcoin Magazine on X (Twitter).

Essentially, financial institutions analyze risk and reward on financial assets crossing annualized volatility to annualized return. Annualized return is the average amount an investment generates each year over a given period. Higher annual returns imply better long-term profitability.

On the other hand, annualized volatility measures the price fluctuations of an asset over a year. It acts as a proxy for investment risk. High volatility signifies larger price swings and hence more potential for loss or gain.

Moreover, analysts often evaluate volatility using standard deviations. A more significant deviation shows higher volatility and vice versa.

What is the annualized risk-reward for Bitcoin vs. other assets?

Notably, Bitcoin’s risk-reward is set at around a 60% annualized return over a 69 standard deviation for the annualized volatility. This is indeed a result of “a different universe,” as stated by Jurrien Timmer.

Particularly, Fidelity’s chart analyses results from 2020 to October 29, 2023, from multiple financial assets in two axes:

  • The X-axis (horizontal) represents the risk, illustrated by the annualized volatility through the standard deviation in the period.
  • The Y-axis (vertical) represents the reward, measured by the annualized return of each given asset.
Risk vs. Return: 2020-2023, weekly data. Source: Fidelity Investments
Risk vs. Return: 2020-2023, weekly data. Source: Fidelity Investments

Interestingly, the second best-performing asset is the SPX on the stock market, with a return going from 16-26% and a risk between 18 to 24 standard deviations. China has had the second-higher risk with an annualized volatility between 25 to 28 while accruing negative returns in the 3-year period.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Comments

No comments to show.
New Bookmakers
Playfina.com

The newest member of DAMA N.V. family offers more than 6000 games and accepts a wide range of cryptocurrencies, which are arguably the most widely used form of payment for gamblers right now.

Cryptoplay.io

In the year 2021, Cryptoplay Casino went live for the first time. To bitcoin enthusiasts, the online gaming site offers an amazing game library, exclusive bonuses, and promotions.

CryptoGames

Since its inception in 2014, this crypto casino has amassed a sizable following and an even stronger reputation. This all-crypto casino has 8 Provably Fair games, a faucet, and the ability to utilize one of ten cryptocurrencies.

PlayAmo

In general, if you're looking for information on the PlayAmo casino's features and idiosyncrasies, you'll find it here.

Oshi

Oshi Casino is a bitcoin casino with a simple instant-play interface that accepts euro deposits as well as other cryptocurrencies like Ethereum.