How Does the Sharpe Ratio Differ from Beta in Assessing Crypto Risk?

The Sharpe Ratio measures an investment's risk-adjusted return by calculating the excess return over the risk-free rate per unit of total volatility (standard deviation). Beta measures only the asset's sensitivity to the overall market (systemic risk).

For crypto, the Sharpe Ratio is often preferred as it accounts for the high total volatility, providing a more comprehensive view of the return generated for the risk taken, whereas Beta is primarily used for calculating the cost of equity.