Bitcoin (BTC $88,726.94) may no longer justify the risks, as its Sharpe Ratio — a measure of risk-adjusted returns — has turned negative.
According to CryptoQuant, the metric shows that Bitcoin’s recent price swings are failing to deliver returns sufficient to compensate for volatility. Even after pulling back from October highs above $120,000, sharp intraday moves and uneven rebounds continue to weigh on risk-adjusted performance.
Historically, Bitcoin’s Sharpe Ratio has gone negative during deep bear markets, including in late 2018 and 2022, often remaining depressed for months after steep price drops. Some analysts and social media observers have suggested that the latest negative reading could hint at the end of Bitcoin’s downtrend and a potential new bull cycle.
Analysts caution, however, that a negative Sharpe Ratio does not predict price direction. “It doesn’t call bottoms with precision,” said a CryptoQuant analyst. “It shows when risk-reward has reset to levels that historically precede major moves. We’re oversold—not because prices can’t go lower, but because the risk-adjusted setup favors long-term positioning.”
Traders typically monitor whether the ratio moves back toward positive territory, which historically signals improving risk-reward conditions. For now, Bitcoin remains near $90,000 amid ongoing volatility and underperformance relative to gold, bonds, and global tech stocks.
