The Bitcoin Sharpe ratio, which measures danger/reward potential, is in unfavourable territory that’s usually related to the tip of bear markets, in keeping with CryptoQuant analyst Darkfost.
“The Sharpe ratio has simply entered a very fascinating zone, one which has traditionally aligned with the ultimate phases of bear markets,” stated the analyst on X on Saturday.
They added, nonetheless, that it isn’t a sign that the bear market is over, “however moderately that we’re approaching a degree the place the risk-to-reward profile is turning into excessive.”
The Sharpe ratio has fallen to -10, its lowest degree since March 2023, in keeping with CryptoQuant.
The ratio measures Bitcoin (BTC) efficiency relative to the danger taken, indicating how a lot return an investor can anticipate for every unit of danger.
Adverse ratio indicators market turning level
The ratio was decrease in late 2022 to early 2023, and late 2018 to early 2019 — each durations marking the depths of the bear market cycle. The metric fell to zero in November 2025 when BTC costs hit a neighborhood low of $82,000.
The analyst stated that in sensible phrases, “the danger related to investing in BTC stays excessive relative to the returns not too long ago noticed.”
“The ratio remains to be deteriorating, displaying that BTC’s efficiency just isn’t but enticing in comparison with the danger being taken,” they added.
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Nonetheless, a unfavourable Sharpe ratio normally indicators market turning factors, they stated.
“However such a dynamic is exactly what tends to seem close to market turning zones. We’re step by step approaching an space the place this pattern has traditionally reversed.”
True reversal may very well be months away
The analyst cautioned that this part “might final a number of extra months, and BTC may proceed correcting earlier than a real reversal takes place.”
Analysts at 10x Analysis additionally expressed warning in a market replace on Monday, stating:
“Whereas sentiment and technical indicators are approaching excessive ranges, the broader downtrend stays intact. Within the absence of a transparent catalyst, there’s little urgency to step in.”
BTC tanked to $60,000 on Friday however recovered to $71,000 by Monday. Nonetheless, it stays down 44% from its October peak of $126,000, and sentiment stays firmly in bear market territory, analysts say.
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