Bitcoin's Sharpe Ratio Hits Bear Market Bottom Levels
According to analyst Darkfost, Bitcoin's Sharpe Ratio has fallen to -10, the lowest level since March 2023. This metric indicates the market is currently in a high-risk, low-return phase consistent with late-stage bear market behavior.
Historical Patterns Suggest Market Shift
Looking at historical data, Bitcoin's Sharpe Ratio showed similar lows between late 2018-early 2019 and late 2022-early 2023. These periods corresponded with market bottom formations.
- End of 2018 bear market: Sharpe Ratio dropped to -8
- Early 2023: Ratio briefly hit -9
Additionally, the metric reached zero in November 2025 when Bitcoin's price touched $82,000 before rebounding.
Risk-Reward Balance Nearing Extremes
While a negative Sharpe Ratio doesn't necessarily mean the bear market is ending, it does suggest the market is approaching a phase of extreme risk-reward imbalance. These signals often appear near market turning points, warranting close investor attention.