Vinny Lingham, co-founder of crypto wallet Civic tweeted on Tuesday that Bitcoin will either go up to $50,000 or go down to $5,000. He debunked the claim of doubling, stating that BTC doesn’t conform to the typical Sharpe Ratio and that a 2x increase produces a 5x upside effect.
#Bitcoin doesn’t conform to the typical Sharpe Ratio calculations. For instance, if Bitcoin doubled from here, it’s likely to go past $50k, which would be a 5x increase from today. This essentially means a 2x increase produces, in effect, a 5x upside.
— Vinny Lingham (@VinnyLingham) August 4, 2020
Talks around Bitcoin doubling in the new rally have been quite trending, as Bitcoin has shown resistance and steady growth over the past couple of weeks. However, Vinny claimed that it is quite unlikely that BTC can double to reach $20,000. He said,
A few weeks ago, Indian crypto influencer and co-founder of Crypto Kanoon, Kashif Raza had presented an analogy, which predicted that Bitcoin will reach $50,000 and the overall market cap for BTC will stand at $1 trillion. He backed his argument by quoting renowned hedge fund manager Paul Tudor Jones, who had said at the time that his firm has invested 1% of their total capital fund in Bitcoin, and many of his industry counterparts are expected to follow suit.
However, Vinny’s prediction that Bitcoin could jump up to $50,000 is backed by the observation of the Sharpe Ratio, which according to him, is flawed in terms of BTC. Developed by William Sharpe, “the ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.”