Bitcoin is less volatile than Tesla and Apple stocks: Binance CEO
Changpeng Zhao, CEO of Binance, says Bitcoin’s volatility cannot be compared to other cryptos. Data shows that Bitcoin (BTC) is less volatile based on its returns.
The CEO of Binance said so in an interview with Bloomberg TV on May 3. Tesla (TSLA) and Apple (AAPL) stocks were more volatile than BTC stocks, according to the CEO. According to the CEO, volatility existed in all markets and not just the crypto market.
Looking for quick news, tips and market analysis? Sign up for the Invezz newsletter today.
However, Zhao’s claims are quite skeptical. Every trading expert will tell you that the prices of Bitcoin and other cryptocurrencies fluctuate more than the company’s shares.
Tesla is a unique case
Tesla’s market cap is $ 633 billion. The company has fallen behind the world’s leading companies in terms of profit, with its net profit not reaching $ 500 million. Tesla shares are less profitable than those of Microsoft (MSFT), Facebook (FB), Google (GOOG) and others.
Charts show that Tesla’s shares are more volatile than other stocks of companies valued at $ 200 billion. Tesla’s volatility cannot be compared to crypto. Unlike TSLA, BTC does not gain value and does not have a valuation model.
However, Zhao’s business activity cannot be used to help retail investors assess their income. Although he may be the head of one of the major cryptocurrency exchanges, he does not trade cryptocurrencies frequently. Rather, the CEO chooses HODL. This helps it to avoid the stress of market volatility. Holding is the best strategy for long-term speculation.
Volatility and returns are exclusive
Volatility cannot be used to measure the value of cryptocurrencies. Crypto holders can measure the value of cryptocurrencies using the amount of returns earned. It doesn’t matter how volatile the crypto is. The only metric that matters are high returns and earned earnings.
MicroStrategy, a crypto analyst firm, has provided a chart that will assess Bitcoin’s returns and Sharpe ratio.
The Sharpe Ratio is a measure of risk-adjusted returns (truly volatility-adjusted). It is a way of measuring the return generated by an investment for the risk (volatility) borne over a certain time horizon.
Data from MicroStrategy shows that Bitcoin is leading the way in terms of risk return. Returns were evaluated using major assets and indices over a one month period.
According to Zhao’s analysis, Bitcoin’s volatility could be similar to that of shares of billion-dollar companies. However, based on the returns derived from volatility, Bitcoin is taking the lead.