Bitcoin has historically performed exceptionally well on these two metrics. As shown in the chart below, Bitcoin's Sharpe Ratio and Sortino Ratio have significantly outperformed stocks, bonds, and real estate over the past 10 years, except for the period between 2018 and 2022. But for outsiders, you need to give them some reasons to buy Bitcoin: The reasons used to be quite solid. From a narrative perspective, Bitcoin has the attributes of a non-sovereign asset that can hedge against risks, as well as the scarcity of digital gold. When large institutions allocate assets, they don’t just look at the narrative; they also consider the statistical risk-return ratio of the asset. Institutions often use metrics like the Sharpe Ratio and Sortino Ratio to evaluate an asset’s risk and return. Simply put, the higher the Sharpe Ratio of an asset, the more money you make for taking on the same level of volatility risk. A higher Sortino Ratio indicates that for the same level of "loss risk," you can earn higher excess returns. Bitcoin has historically performed exceptionally well on these two metrics. As shown in the chart below, Bitcoin's Sharpe Ratio and Sortino Ratio have significantly outperformed stocks, bonds, real estate, gold, and other major asset classes over the past 10 years, except for the period between 2018 and 2022. However, as of this year (see Chart 3), Bitcoin’s Sharpe Ratio is still strong but has already fallen behind gold and Google. From a risk-return perspective, it’s difficult for institutional investors to allocate incremental funds into Bitcoin, as buying gold and large-cap U.S. stocks seems more attractive. Of course, the crypto space isn’t without hope. Looking at historical trends, Bitcoin tends to perform well in Q4. Additionally, Bitcoin ETF holdings don’t show clear signs of a turning point, suggesting that the recent decline is primarily driven by sentiment. Alright then, Bitcoin is bracing for winter. This time, it really needs to *fangshouyibo* (hold the line). #Bitcoin #Crypto #Investing #SharpeRatio #SortinoRatio #BTC