February Saw a Drop in Bitcoin’s Risk-Adjusted Returns.

Bitcoin’s Risk-Adjusted Returns Drop as Volatility Rises in 2025

Bitcoin has struggled in early 2025, with heightened volatility leading to a decline in its risk-adjusted returns, according to research firm Ecoinometrics.

Although Bitcoin’s total returns over the past year have kept pace with gold—a traditional safe-haven asset—its risk-adjusted performance suggests a stronger resemblance to major stock indices. Increased price swings have made Bitcoin a less stable investment relative to its historical positioning.

Risk-adjusted returns assess an asset’s profitability in relation to its volatility. A higher ratio indicates better returns with lower risk, while a lower ratio signals greater instability.

Bitcoin’s recent struggles have been driven by trade war tensions, geopolitical uncertainties, and ambiguity surrounding President Trump’s stance on cryptocurrency regulation. As a result, Bitcoin is slightly down for the year, while gold has climbed over 11% year-to-date.

“Currently, Bitcoin and gold have a negative correlation on a 20-day moving average over a five-year period,” noted CoinDesk analyst James Van Straten. “Historically, when this correlation turns negative, Bitcoin has been at or near a bottom—similar to early 2023, summer 2023, summer 2024, and now. Typically, BTC catches up with gold after these phases.”

This shift in risk dynamics could affect Bitcoin’s appeal to institutional investors, who often favor assets with more predictable risk-adjusted returns. While Bitcoin’s long-term narrative as “digital gold” remains intact, its short-term movements indicate it is trading more like an equity than a safe-haven asset.