Cryptocurrency And Traditional Banking: A Comparative Analysis Of Risk And Return In Emerging Markets

Abdul Rasyid, Yudi Zatnika, Wayan Suryathi

Abstract


This study uses daily data and Sharpe Ratio analysis to compare the risk and return performance of Bitcoin (BTC), Ethereum (ETH), and Indonesia’s BI 7-Day Reverse Repo Rate from 2020 to 2024. While BTC and ETH showed high returns in bullish years like 2020, their high volatility led to significant losses during downturns, especially in 2022. In contrast, Indonesian bank deposits offered stable but lower returns. For instance, IDR 1 million in crypto could grow to over IDR 2 million or fall below IDR 800,000, while a bank deposit would steadily reach around IDR 1.15 million in five years. This study used a quantitative method with secondary data from CoinMarketCap, Bank Indonesia, and the Ministry of Finance. Return, volatility, and Sharpe Ratio were calculated to assess risk-adjusted performance, supported by visual tools like line graphs, boxplots, and bar charts. The findings highlight the trade-off between risk and return, especially in emerging markets like Indonesia. Cryptocurrencies may appeal to younger, risk-tolerant investors, while bank deposits remain a safer option for those prioritizing capital preservation. The results emphasize the need for investor education, balanced regulation, and further research to support informed participation in traditional and digital finance.

Keywords


Cryptocurrency; Bitcoin; Ethereum; Investment Emerging Markets

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DOI: https://doi.org/10.15548/al-masraf.v10i1.1681

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