Bitcoin is less volatile than Tesla and Apple stocks: Binance CEO

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys playing cricket,… read more.
on May 10, 2021
  • Bitcoin’s volatility is similar to the volatility of Apple and Tesla stocks.
  • Bitcoin’s volatile nature is its stronghold as it derives massive returns.
  • Tesla stocks are more volatile compared to other trillion-dollar companies.

Changpeng Zhao, the Binance CEO, says Bitcoin’s volatility cannot be compared to other cryptos. Data shows that Bitcoin (BTC) is less volatile based on its returns.

The Binance CEO stated this during an interview with Bloomberg TV on May 3. According to the CEO, Tesla (TSLA) and Apple (AAPL) stocks were more volatile than BTC stocks. According to the CEO, volatility existed in all markets and not just the crypto market.

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However, Zhao’s allegations are quite skeptical. Every trading expert will tell you that Bitcoin prices and other cryptocurrencies fluctuate more than company stocks.

Tesla is a unique case

Tesla’s market capitalization stands at $633 billion. The company has lagged behind top global companies in terms of profits as its net income has failed to reach $500 million. Tesla stocks are less profitable compared to Microsoft (MSFT), Facebook (FB), Google (GOOG), and others.

The charts shows that Tesla stocks 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 earn value, and it does not have a valuation model.

However, Zhao’s trading activity cannot be used to help retail investors gauge their earnings. While he may be the head of one of the leading crypto exchanges, he does not trade cryptocurrencies frequently. Rather, the CEO chooses to HODL. This helps him 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 earned returns. The level of volatility for crypto does not matter. The only metric that matters is the high returns and gains earned.

MicroStrategy, a crypto analyst company, has provided a chart that will assess the returns and Sharpe ratio of Bitcoin.

The Sharpe ratio is a measure of risk-adjusted (really volatility-adjusted) returns. It is a way to measure how much return an investment generated for the risk (volatility) endured over some time horizon.

The data from MicroStrategy shows that Bitcoin takes the lead in terms of risk returns. The returns were assessed using major assets and indices over a period of one month.

According to Zhao’s analysis, Bitcoin’s volatility may be similar to the stocks of billion-dollar companies. However, based on returns derived from volatility, Bitcoin takes the lead.

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