What is the Sharpe ratio?
The Sharpe ratio measures return per unit of risk: the average return above a risk-free rate, divided by the volatility of those returns. A higher number means more return for each unit of swing. A negative value means the asset returned less than the risk-free rate over the period.
From the Staxo crypto glossary. The examples use Kraken daily candles (UTC), Oct 10, 2025 to Oct 10, 2026, for the eight coins on Staxo's free plan that are not stablecoins.
The Sharpe ratio formula
Sharpe ratio = (average return − risk-free rate) ÷ standard deviation of returns. The top of the fraction is the reward for taking risk, the bottom is how much the returns swung while you earned it. William Sharpe introduced it in 1966, and it is still the most common way to compare returns that came with different amounts of risk.
To annualize it from daily data, divide the average daily return by the daily standard deviation and multiply by the square root of 365. For Bitcoin from Oct 10, 2025 to Oct 10, 2026, the average daily return was -0.058% and the standard deviation 2.32%, which gives -0.48. These pages use a risk-free rate of 0%, so the result is simply return per unit of volatility.
Sharpe ratios of the top coins over the last 12 months
| Coin | Sharpe ratio | 1-year change | Annualized volatility |
|---|---|---|---|
| TRON | 0.24 | +2.9% | 23.7% |
| Ethereum | -0.38 | -34.7% | 62.1% |
| Bitcoin | -0.48 | -26.6% | 44.3% |
| XRP | -0.48 | -41.0% | 64.9% |
| Solana | -0.50 | -41.8% | 65.7% |
| BNB | -0.69 | -36.3% | 48.3% |
| Dogecoin | -0.86 | -55.8% | 67.7% |
| Cardano | -0.88 | -62.0% | 76.2% |
Only TRON had a positive Sharpe ratio, 0.24: a small gain with the lowest volatility of the group. Cardano came last at -0.88, with a -62.0% year at 76.2% volatility. In a year when most coins fell, the ranking mostly sorts the losses by how much volatility came with them.
How to read a Sharpe ratio
In traditional finance, a Sharpe ratio above 1 is usually called good and above 2 very good, measured over several years. One year of crypto data is short, so treat a single number as a description of that year, not as a property of the coin.
The ratio also treats a jump up the same as a fall, because both add to the standard deviation. A coin that rose in a few big bursts can look worse than its gains deserve. The Sortino ratio fixes this by counting only the downside swings. And with a positive risk-free rate, every number in the table would be lower than it is here.
How to practice it in Staxo
You can measure the Sharpe ratio of your own trading in Staxo. Write down the value of your demo portfolio every Sunday for two months. Work out the weekly change in percent, then divide the average change by its standard deviation (a spreadsheet does this in two formulas).
Do it for two approaches side by side, for example a few active trades a week against steady weekly buys, and compare. The higher ratio is the approach that earned more per unit of swing in your account. Your $500 in demo money makes the experiment free.
Free on iPhone and Android, $500 in demo money. Also on Google Play.Also on the App Store.
Sharpe ratio questions
What is a good Sharpe ratio for crypto?
There is no fixed bar. The traditional rule of thumb calls above 1 good, but crypto ratios swing widely from year to year. From Oct 10, 2025 to Oct 10, 2026, the eight coins on Staxo's free plan ranged from -0.88 to 0.24.
Why is the risk-free rate 0% on these pages?
To keep the numbers reproducible from the price data alone. The risk-free rate is normally the yield on short-term government bills, which changes over time. A positive rate would lower every Sharpe ratio here by the same amount relative to volatility.
Try it with $500 in demo money.
Free download, no card. Also on Google Play.Also on the App Store.
Educational content, not investment advice. The examples describe prices from Oct 10, 2025 to Oct 10, 2026 and say nothing about where they go next. Staxo is a simulator: you practice with demo money, never real money.