Bitcoin Risk-Adjusted Returns Stable at 6+ Year Levels

• Bitcoin has been on a tear over the past few weeks, with price action intensifying as bulls attempt to turn $40,000 into a support level.
• If the crypto continues to hold above this previous resistance, it could allow for even more significant upside in the days and weeks to come.
• One analyst explained that while it appears that Bitcoin’s rally may be overly prolonged, its risk-adjusted returns are comparable to their historical level.
• As such, there is a strong possibility that the crypto could see considerable upside potential before reaching a point of exhaustion.
• Once its returns are significantly higher than its risk-adjusted returns have been historically, the crypto could then be at risk of posting a 2017-type high.

Bitcoin and the entire crypto market are currently in the midst of a parabolic bull market. Although not as drastic as seen in late 2017, it allowed Bitcoin to double its previous highs.

This rally shows no signs of slowing down as Bitcoin prepares to push $40,000 into a support level. Continued trading above this level could lead to a further rise in the coming days.

An on-chain analyst said that while the benchmark cryptocurrency is seeing intense momentum, its rally may be far from overheated.

Bitcoin Holds Above $40,000 as Uptrend Continues

At the time of writing, Bitcoin is trading slightly at its current price of $40,300. This is pretty much where it has consolidated over the last few days.

It made a few attempts to recover in the $40,000 region, but each of them was met with serious selling pressure that slowed its rise.

Its reaction to $50,000 – if that level were tested – will likely provide significant insight into how long this parabolic rise will last.

On-Chain Analyst: BTC Risk-Adjusted Returns Indicate Upside is Imminent

An analyst explained in a recent tweet that he expects Bitcoin’s risk-adjusted returns to extend well beyond where they currently are before the crypto peaks.

He seems to believe that until these risk-adjusted returns become exorbitantly higher than usual, there is room for improvement.

“If you think you’re late to the Bitcoin party, think again. Bitcoin’s risk-adjusted returns have been at the same high levels for 6 consecutive years. Clearly outperforming all other asset classes since its inception.

Image Courtesy of Willy Woo.

The entire medium-term market trend is likely to largely depend on whether Bitcoin can continue to hold above $40,000, as a prolonged decline below this level could lead to serious downsides.

Featured image from Unsplash.
Charts from TradingView.