CryptoQuant Analyst Darkfost: Bitcoin Sharpe Ratio Returns to Extreme Negative Territory

Bitcoin’s Sharpe ratio has again reached an extreme negative zone, dipping below -20 before slightly rebounding, according to CryptoQuant analyst Darkfost. According to PANews, the Sharpe ratio measures the relationship between investment risk and return, and a negative reading indicates higher risk relative to current returns. Darkfost said the move aligns with Bitcoin posting a decline for a third consecutive quarter, with the latest quarter down 16.1%. Based on historical data, Darkfost noted that periods of extreme pessimism have often lasted from several weeks to several months and have corresponded to a new bottom-building phase, followed by a price restart. The analyst added that the data suggests the market may be nearing such a phase, while emphasizing that this is an observation based on a long-term timeframe.