Darkfost of CryptoQuant, an analyst, says that the Bitcoin Sharpe ratio (which measures risk/reward) is now in negative territory, which is associated with bear markets ending.
“The Sharpe ratio has just entered a particularly interesting zone, one that has historically aligned with the final phases of bear markets,” said The analyst will be on X Saturday.
However, they added that this is not an indication that the bear markets are over. “but rather that we are approaching a point where the risk-to-reward profile is becoming extreme.”
Sharpe ratio is at its lowest point since March 20,23. according CryptoQuant is a great way to learn.
Bitcoin ratio (BTCThe performance of an investment relative to its risk is a measure of the return that can be expected by investors for every unit taken.
Negative ratios signal market turning point
The ratio was lower in late 2022 to early 2023, and late 2018 to early 2019 — both periods marking the depths of the bear market cycle. The ratio is a metric fell to zero in November 2025 When BTC hit an all-time low price of $82,000.
He said in practical terms. “the risk associated with investing in BTC remains high relative to the returns recently observed.”
“The ratio is still deteriorating, showing that BTC’s performance is not yet attractive compared to the risk being taken,” Additions to the list include:
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A negative Sharpe is usually a sign of a turning point in the market, according to their report.
“But this type of dynamic is precisely what tends to appear near market turning zones. We are gradually approaching an area where this trend has historically reversed.”
It could be several months before we see a true turnaround.
Analysts warned that the phase is still in its early stages. “may last several more months, and BTC could continue correcting before a true reversal takes place.”
The analysts of 10x Research expressed caution as well in their market update from Monday. stating:
“While sentiment and technical indicators are approaching extreme levels, the broader downtrend remains intact. In the absence of a clear catalyst, there is little urgency to step in.”
BTC dropped to $61,000 on Friday and recovered to $71,000 on Monday. It is still down by 44% compared to its peak in October of $126,000. sentiment Staying firmly in bear market territoryExperts claim.
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Source: cointelegraph.com
