Bitcoin’s Risk-Adjusted Returns are Steady at 6 Year+ Levels

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  • Bitcoin has gotten a rift in the past few weeks, and its price action has tightened as bulls try to push $ 40,000 to support levels
  • If the crypto continues above this previous resistance, it could allow for a significant uptrend in the coming days and weeks
  • One analyst said that while Bitcoin’s rally seems overdone, its risk-adjusted returns are in line with historical levels
  • Hence, there is a strong possibility that the crypto will point significantly higher before it reaches a point of exhaustion
  • Once returns are drastically higher than past risk-adjusted returns, the crypto may be at risk of releasing a 2017 style blowoff top

Bitcoin and the entire crypto market are currently in the middle of a parabolic bull market. While not as drastic as it was in late 2017, Bitcoin has allowed it to double its previous highs.

This rally shows no signs of slowing down as Bitcoin pushes $ 40,000 to support levels. Sustained trading above this level could lead to another uptrend in the coming days.

An on-chain analyst said that while the benchmark crypto is enjoying intense momentum, its rally could not be overheated by any means.

Bitcoin is holding over $ 40,000 as the upward trend continues

At the time of writing, Bitcoin is trading marginally at its current price of $ 40,300. It has consolidated here in the last few days.

It has made some attempts to rally around $ 40,000 in the area, but each of them has faced serious selling pressures that have slowed its rise.

The $ 50,000 response – should that level be tested – will likely provide significant insight into the duration of this parabolic ascent.

On-Chain Analyst: BTC risk-adjusted returns suggest an uptrend is imminent

An analyst stated in a recent tweet that he expects Bitcoin’s risk-adjusted returns to well exceed current limits before the crypto peaks.

He seems to believe that there is room for a rally until these risk-adjusted returns get exorbitantly higher than usual.

“If you think you will be late for the bitcoin party, think again. Bitcoin’s risk-adjusted returns have been at the same high level for 6 years. Significant outperformance versus any other asset class since its inception. “

Image courtesy of Willy Woo.

Where overall market trends in the medium term should largely depend on whether or not Bitcoin can continue to hold above $ 40,000, as a prolonged drop below that level could result in serious downward moves.

Featured image from Unsplash. TradingView charts.