Bitcoin’s Sharpe Ratio Is Near Zero — Here’s What Happened the Last Time It Collapsed

Core Insights - Bitcoin's risk-adjusted performance, as measured by the Sharpe Ratio, is declining to historically low levels, indicating market stress and potential risk repricing [1][2][4] - Analysts express concerns that the current downturn may lead to deeper losses and a broader bear market phase [1][4] Bitcoin Sharpe Ratio Analysis - Recent data from CryptoQuant shows Bitcoin's Sharpe Ratio has approached zero, a level typically associated with high uncertainty and weak returns [2][3] - Historical patterns indicate that previous collapses in the Sharpe Ratio in 2019, 2020, and 2022 were followed by extended corrective periods [4][6] - The current low Sharpe Ratio suggests that while the immediate outlook is uncertain, it may signal the early stages of improving future returns if price conditions stabilize [6][7] Investor Behavior - The decline in the Sharpe Ratio coincides with a modest re-accumulation among larger Bitcoin investors, as indicated by an increase in wallets holding at least 100 BTC by 0.47% since November 11, adding 91 new mid-sized whale addresses [8] - This uptick follows a period of declining balances among the largest holders, with wallets holding more than 1,000 BTC decreasing steadily [8]