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bitcoincriterion.com
Bitcoin Criterion
@bitcoincriterion.com
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Demonstrating how to pair Bitcoin with stable assets to beat the S&P 500—at a fraction of the S&P 500's volatility - Bitcoincriterion.com
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The 10-year backtest (Oct 2014-Nov 2024) that determined the 7%, 11%, and 15% Bitcoin allocations. Log scale shows how Shannon's Demon enhanced returns by systematic rebalancing between Bitcoin ($100 to $27,260) and Short-Term Corporate Bonds. #Bitcoin#Trading#Stocks#Crypto-Bitcoincriterion.com
The Chart, from bitcoincriterion.com, records how combining Bitcoin with stable assets compares to S&P 500 performance while reducing volatility. The 10-year logarithmic scale analysis (October 2014 - November 2024) examines performance across six investments, all beginning at $100: 1. Bitcoin (represented by black line) reached $27,260.36, with extreme volatility and 82.88% maximum drawdown, experiencing major market gains in 2017 and 2021, followed by significant declines. 2. Short-Term Corporate Bonds (represented by yellow line) reached $125.68 with minimal volatility. 3. S&P 500 (represented by red line), the benchmark index, reached $290.07 with a 35% maximum drawdown, establishing a reference point for portfolio performance and volatility. 4. Conservative Portfolio (represented by blue line) reached $302.55, achieving 104% of the S&P 500's annual return, with reduced risk: 4.64% maximum drawdown and 30% of the S&P 500's weekly standard deviation, indicating superior risk-adjusted performance. 5. Balanced Portfolio (represented by green line) reached $403.41, achieving 133% of the S&P 500's annual return, with 9.15% maximum drawdown and 47% of the S&P 500's weekly standard deviation, indicating improved risk-adjusted performance. 6. Growth Portfolio (represented by brown line) reached $533.32, achieving 162% of the S&P 500's annual return, with 14.17% maximum drawdown and 65% of the S&P 500's weekly standard deviation. The logarithmic scale measures percentage changes, presenting Shannon's Demon - how systematic weekly rebalancing between volatile Bitcoin and stable bonds enhances geometric returns while reducing risk. Regular intervals mark periods, with values measured on a percentage basis. The data indicates how rebalancing captures Bitcoin's gains while limiting losses through systematic selling at high points and buying at low points.
March 16, 2025 at 3:59 PM