The risk-reward ratio of crypto assets is unbalanced, and the rapid rise of this round of risk assets may be countdowned.

bridge_anxiety · 2026-01-19T09:08:54+00:00

Recently, cryptocurrencies have risen by about 90%, but their performance over the same period is similar to the stock market, with volatility 7 times higher. This means investors are taking on higher risks without receiving excess returns, or it may indicate that the upward cycle of risk assets is nearing its end, which warrants investor caution.

bridge_anxiety

2026-01-19 09:08:54

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Recently, there has been an interesting observation in the market: cryptocurrencies are rising, but not as “cost-effective” as stocks.

Bloomberg Intelligence’s commodities strategist recently pointed out a sobering fact. Taking the Bloomberg Galaxy Crypto Index (BGCI) as an example, from the end of 2017 to December 30 of this year, the cumulative increase was about 90%, which sounds impressive. However, compared to the total market capitalization growth of global stocks, the two are actually quite similar. The question is—cryptocurrencies have a volatility that is about 7 times higher annually.

What does this mean? In traders’ words: You are taking on 7 times the risk but not receiving the corresponding excess return. This is not just a simple “not cost-effective” situation; it is also a warning signal that the current rapid rise in risk assets may be nearing its end.

Industry veteran analysts are also paying attention to this phenomenon. High-risk assets typically command a premium when market enthusiasm is high, but when the risk-reward ratio reverses, it often indicates that the growth momentum is waning. For investors, this is a warning worth pondering—not all rises are worth chasing.

From a broader macro perspective, this “high volatility, low return” phenomenon in the crypto market is becoming a turning point indicator. When risk assets themselves begin to show signs of fatigue, a cycle shift may not be far off.

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