Bitcoin’s Sharpe ratio — a tool that compares how much money investors make to how much risk they take — has dropped to -10, its lowest level since March 2023, according to CryptoQuant. This is not just a small move; it places the market in territory that has historically appeared near the end of painful downturns.
In simple terms, a positive Sharpe ratio means investors are being rewarded for taking risk. A negative one means they are taking big risks but getting poor returns. Right now, Bitcoin sits firmly in that negative zone.
CryptoQuant analyst Darkfost said this level is “particularly interesting” because similar readings appeared during past market bottoms in 2018–2019 and late 2022–early 2023. However, he warned that this does not mean the bear market is finished — only that the risk-to-reward balance is becoming extreme.
The ratio also briefly hit zero in November 2025, when Bitcoin printed a local low around $82,000, showing how quickly conditions can change in crypto markets.
Why negative can still matter
Even though “negative” sounds bad, analysts see it as a useful signal. When the Sharpe ratio sinks this low, it often means selling pressure may be close to exhaustion. Many of the most fearful sellers have already exited, which can set the stage for future rebounds — though timing is uncertain.
Darkfost stressed that, right now, “the risk of investing in BTC remains high compared with the returns investors are actually seeing.” He added that the ratio is still sliding, meaning Bitcoin has not yet become attractive on a risk-adjusted basis.
Put simply: the market is still fragile, and prices can move sharply in either direction.
Price crash, quick bounce — but trend still weak
Last week showed exactly how wild Bitcoin can be. On Friday, BTC briefly tanked to $60,000, shocking traders. By Monday, it had recovered to about $71,000, a fast rebound that looked impressive on the surface.
But the bigger picture is still gloomy. Bitcoin remains down 44% from its October peak of $126,000, which is why many analysts say sentiment is still stuck in bear-market mode. Big losses like that take time to heal.
Researchers at 10x Research echoed the cautious view, warning that the current phase could last several more months before a “true reversal” arrives. In their view, more corrections are possible before a lasting rally begins.
Key facts at a glance (about 15%)
- Sharpe ratio now: -10 (lowest since March 2023)
- Past similar lows: 2018–2019 and 2022–2023
- Ratio hit 0 in Nov 2025 at about $82,000
- Price crash last week: $60,000
- Price rebound: about $71,000 by Monday
- Still 44% below October high of $126,000
Overall, Bitcoin is in a deep, uneasy reset. The risk is still high, the mood is still bearish, but history suggests that moments like this can eventually lead to stronger rebounds — just not right away.
