Bitcoin Sortino Ratio (Patreon)

The new IA Rotation Model works best on High Sortino Assets.

Q is should you use BTC (ie a proxy such as IBIT or FBTC?

The Sortino Ratio is similar to the Sharpe Ratio, in that it measures risk-adjusted returns. However unlike the Sharpe Ratio, it ONLY considers downside volatility, and accepts that upside volatility is actually desirable.

When the Sortino Ratio is trading at 2.0 for example, it means every unit of downside risk you take on, is rewarded by at least two fold in upside returns. In other words, if you stick around, surviving that dreaded drawdown will pay for itself later on, twice over.

Over 2y to 5y investing windows, Bitcoin consistently hits a Sortino Ratio of 1.5x to 2.0x, indicating it provides ample upside return to compensate for the occasional (and very normal) drawdown.

So the answer is hell yes!

That being said... beware the bear if we get one.

Historic Drawdowns