Last month, the world’s largest money manager BlackRock Inc. Spotlight from the Securities and Exchange Commission bitcoin asked him to approve the exchange-traded fund.
Mike Novogratz Thinks BlackRock ETF Application Will Change Things
According to Novogratz, when Bitcoin ETFs are released, there will be less talk about whether Bitcoin is a scam or not.
In fact, ETF approval will make us less likely to hear statements like “Bitcoin is a bubble, Bitcoin is a pyramid scheme”.
On the other hand, Novogratz claimed that Bitcoin has produced a higher Sharpe Ratio (a popular measure of risk-adjusted return) than any other investment in the past three years.
The Sharpe Ratio mentioned by Novogratz compares an investment’s excess return on cash with its volatility, and a higher ratio indicates a better risk-return balance.
For example, even though Bitcoin far outstripped the S&P 500 Index, it has been 13 times more volatile when measured by the annual standard deviation, so the Sharpe Ratio isn’t much better.
Bitcoin has generated a rate of 0.92 since 2010, which is barely higher than the 0.89 rate of the S&P 500.
Although Bitcoin seems more profitable when viewed in the long term, the situation changes if we look at it in the shorter term.
Starting over the last three years, Bitcoin has produced a Sharpe Ratio of 0.63 until June; this ratio is well below the S&P 500’s 0.8 ratio.
*Not investment advice.
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