Risk is a function of how poorly a strategy will perform if the “wrong” scenario occurs.
—Michael Porter
Similar to non-financial risk, financial risk is higher for cryptoassets than traditional investments. For example, as introduced in Chapter 4, the most traditional measure of financial risk is volatility, expressed as the standard deviation of returns. Downward volatility is another helpful metric used as an input to compute the Sortino ratio, which was introduced in the same chapter. Both metrics indicate ...
