Bitcoin's Risk-Reward Is Off The Charts

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To investors,

The holy grail of investing is to find asymmetric assets that present a more attractive risk-reward trade-off than other opportunities. Anyone can grab a significant return from time-to-time if they are willing to take immense risk. It is much harder to drive outsized returns when you account for the risk you are taking.

This is why bitcoin has become such an incredible asset for investors to add to their portfolio. Take a look at this chart that was shared by Bitwise’s Matt Hougan:

Quite literally, bitcoin is in a class of its own. There is not another asset even in the same zip code as the world’s largest digital currency.

Bitcoin has appreciated 93% in the last year, 1,096% in the last 5 years, and 38,122% in the last decade. The compound annual growth rate for the last 5 years is 64%. These are video game numbers for traditional investors.

But the more impressive part is how Bitcoin’s sharpe ratio stacks up against other assets. According to Case Bitcoin, bitcoin’s 5-year sharpe ratio is 1.34. Compare this to gold (0.96), stocks (0.81), and treasuries (-0.56).

See here is the thing — most retail investors ask themselves how high an asset can go. That is obviously an important question, but the more sophisticated investor asks themselves “how much can I make given the risk I have to take?”

And there is no better answer to that question than bitcoin. Literally nothing else compares. Bitcoin is the story of our generation. A decentralized, digital asset has grown from nothing into a multi-trillion dollar asset. You have the likes of Larry Fink, Paul Tudor Jones, and Stanley Druckenmiller all sharing the same talking points as your crazy libertarian uncle.

Bitcoin won’t stop going up until they stop printing money and it seems obvious now that they are never, ever going to stop printing money.

Hope you all have a great day. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

Bitcoin Is Taking Over Wall Street

Anthony Pompliano and John Pompliano discuss everything that is happening with bitcoin, why bitcoin ETFs are making more money than S&P EFTs, US dollar collapse and what that means for asset prices, why Elon Musk wants to start a new political party, and how this all affects your portfolio.

Enjoy!

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