Crypto: Bitcoin Sharpe Ratio Slides To Levels Seen In Previous Market Bottoms

Bitcoin’s Sharpe ratio has fallen to -10, nearing bear market lows seen in 2018 and 2022, suggesting the risk/reward profile is approaching extreme levels.

The Bitcoin Sharpe ratio, which measures risk/reward potential, is in negative territory that is often associated with the end of bear markets, according to CryptoQuant analyst Darkfost.

“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 on X on Saturday.

They added, however, that it is not a signal that the bear market is over, “but rather that we are approaching a point where the risk-to-reward profile is becoming extreme.”

The Sharpe ratio has fallen to -10, its lowest level since March 2023, according to CryptoQuant.

The ratio measures Bitcoin (BTC) performance relative to the risk taken, indicating how much return an investor can expect for each unit of risk.

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 metric fell to zero in November 2025 when BTC prices hit a local low of $82,000.

The analyst said that 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,” they added.

Related: Bitcoin bear market not over? Trader sees BTC price 'real bottom' at $50K

Source: CoinTelegraph