Cryptocurrency

Bitcoin

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 <p class="paragraph">Fidelity Investments is one of the largest asset managers in the world, with $4.5 <a rel="noopener noreferrer nofollow" title="trillion" href="https://thebittimes.com/tag/trillion.html">trillion</a> in assets under management. Recently, Jurrien Timmer, Fidelity’s Director of Global Macro, published a risk-<a rel="noopener noreferrer nofollow" title="reward" href="https://thebittimes.com/tag/reward.html">reward</a> <a rel="noopener noreferrer nofollow" title="Category Analysis" href="https://thebittimes.com/analysis.html">Analysis</a> on different assets, including Bitcoin (BTC).</p>
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 <p class="paragraph">According to Timmer, Bitcoin’s risk-reward is “in a different universe”, as reported by <em>Bitcoin Magazine</em> on X (Twitter).</p>
 <p class="paragraph">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.</p>
 <p class="paragraph">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.</p>
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 <p class="paragraph">Moreover, analysts often evaluate volatility using standard deviations. A more significant deviation shows higher volatility and vice versa.</p>
 <h2 class="wp-block-heading" id="h-what-is-the-annualized-risk-reward-for-bitcoin-vs-other-assets">What is the annualized risk-reward for Bitcoin vs. other assets?</h2>
 <p class="paragraph">Notably, Bitcoin’s risk-<a rel="noopener noreferrer nofollow" title="reward" href="https://thebittimes.com/tag/reward.html">reward</a> 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 <a rel="noopener noreferrer nofollow" title="universe" href="https://thebittimes.com/tag/universe.html">universe</a>,” as stated by Jurrien Timmer.</p>
 <p class="paragraph">Particularly, Fidelity’s chart analyses results from 2020 to October 29, 2023, from multiple financial assets in two axes:</p>
 <ul>
  <li>The X-axis (horizontal) represents the risk, illustrated by the annualized volatility through the standard deviation in the period.</li>
  <li>The Y-axis (vertical) represents the reward, measured by the annualized return of each given asset.</li>
 </ul>
 <figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="868" height="505" src="https://cdn.thebittimes.com/images/2023/11/04/c3c9ab70270637a5311ac3adffc08c20.webp" alt="Risk vs. Return: 2020-2023, weekly data. Source: Fidelity Investments
" class="wp-image-135600" srcset="https://cdn.thebittimes.com/images/2023/11/04/c3c9ab70270637a5311ac3adffc08c20.webp 868w, https://cdn.thebittimes.com/images/2023/11/04/c3c9ab70270637a5311ac3adffc08c20.webp 300w, https://cdn.thebittimes.com/images/2023/11/04/c3c9ab70270637a5311ac3adffc08c20.webp 768w" sizes="(max-width: 868px) 100vw, 868px">
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   Risk vs. Return: 2020-2023, weekly data. Source: <em>Fidelity Investments</em>
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 <p class="paragraph">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.</p>
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<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/4-5-trillion-fidelity-says-bitcoin-s-risk-reward-is-in-a-different-universe-tbt69059.html">https://thebittimes.com/4-5-trillion-fidelity-says-bitcoin-s-risk-reward-is-in-a-different-universe-tbt69059.html</a></p>

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

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