## Volatility Doubles but Fails to Beat the Stock Market? The Embarrassing Truth About Cryptocurrencies

Bloomberg strategists recently released some eye-opening data: the risk-adjusted performance of cryptocurrencies actually lags behind that of traditional stock markets.

What exactly is going on? According to BlockBeats, the Bloomberg Galaxy Crypto Index has increased by 90% over the past 7 years, from the end of 2017 to December 30. At first glance, that seems decent, but when compared to the total market capitalization growth of global stocks during the same period, it’s roughly the same. So what’s the problem? **Cryptocurrencies have an astonishingly high annual volatility, exactly 7 times higher than that of the stock market**.

In other words, you’re taking on seven times the risk but not receiving a corresponding excess return. Mike McGlone, senior commodities strategist at Bloomberg Intelligence, commented that this might suggest the upward cycle of risk assets is nearing its end—that is, the gains from high risk may soon peak.

For crypto investors, this signal is worth pondering. High volatility can indeed lead to exciting upward movements, but it also means greater risk of sharp declines. In this situation, simply buying cryptocurrencies may not outperform the stock market and could lead to more psychological stress. Perhaps it’s time to think about how to find a better risk balance between the crypto and traditional stock markets.