Contrary to popular belief, bitcoin and ethereum are less volatile than some stocks

As the chart shows, Bitcoin's Sharpe ratio stays at -0.02, while Ether's Sharpe ratio is 0.04. On the other hand, contrary to popular belief, stocks underperform or are similar to digital assets.

Since the formula allows us to determine asset return volatility, most cryptocurrency-related companies are performing at par or lagging Bitcoin and Ether, suggesting that entering the cryptocurrency market through crypto-related stocks may be riskier than buying digital assets directly.

While confidence in the high volatility of cryptocurrencies has persisted, it may soon become outdated as the average volatility of assets such as bitcoin and ethereum is gradually declining compared to the past few years.

In the first three months, bitcoin implied volatility hit a new low of 65%, indicating that traders are unhappy with the short-term performance of first-generation cryptocurrencies and want to avoid aggressive trading.