BlockBeats News, November 25th, according to CryptoQuant data, Bitcoin’s Sharpe Ratio has dropped below 0, reaching the lowest level since the FTX flash crash. Furthermore, there have been multiple instances on the chart where the Sharpe Ratio dropped to or near zero (in 2019, 2020, and 2022), often coinciding with Bitcoin’s price bottom or a major reversal.
The Sharpe Ratio is a metric that measures the risk-adjusted return of an investment. A Sharpe Ratio close to zero usually indicates high price volatility, with returns not sufficient to compensate for the risk, which often occurs at market bottoms or during capitulation (panic selling) phases.
