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Analysis: Bitcoin Sharpe Ratio Dips Below 0, Signaling Major Bottom

2025.11.25 18:51:50

On November 25th, according to CryptoQuant data, the Sharpe Ratio of Bitcoin has dropped below 0 and reached the lowest level since the FTX flash crash. Additionally, there have been several instances on the chart where the Sharpe Ratio dropped to or close to zero (in 2019, 2020, and 2022), frequently coinciding with Bitcoin's price bottom or a significant reversal. The Sharpe Ratio is a metric used to measure the risk-adjusted return of an investment. A Sharpe Ratio close to zero generally indicates high price volatility where the returns are not enough to compensate for the risk, which often happens at market bottoms or during capitulation (panic selling) phases.
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