- Bitcoin Sharpe ratio falls to -10, indicating extreme risk levels.
- Analyst warns of continued high risk relative to recent returns.
- Historically aligns with final phases of bear markets.
CryptoQuant analyst Darkfost reports Bitcoin’s Sharpe ratio has dropped to -10, the lowest since March 2023, indicating significant risk compared to returns.
This situation often signals the final phases of bear markets but suggests persistent high risk, impacting Bitcoin’s current attractiveness for investors.
The Bitcoin Sharpe ratio has hit a significant low of -10, a level last seen in March 2023. According to CryptoQuant analyst Darkfost, this points to extreme risk relative to returns, typical of late bear market phases.
Darkfost highlighted on X (formerly Twitter) that the current ratio signifies a critical zone. The analyst stressed it’s not a sign of the bear market’s end but indicates reaching an intense risk-to-reward point.
The ratio’s latest drop has primarily impacted Bitcoin, which saw a price dip to $60,000 before recovering slightly to $71,000. The cryptocurrency remains 44% down from its October 2025 peak of $126,000, reflecting ongoing market challenges.
Historically, similar Sharpe ratio lows have occurred during bear market depths or final phases. These instances often precede market reversals, although heightened risk can persist for months, according to the analyst’s observations. Darkfost, Analyst, CryptoQuant, stated, “The Sharpe ratio has just entered a particularly interesting zone, one that has historically aligned with the final phases of bear markets,” but cautioned it is “not a signal that the bear market is over, but rather that we are approaching a point where the risk-to-reward profile is becoming extreme.” Source
The market’s current state poses considerable challenges for investors. The heightened risk-to-reward profile can impact investment decisions, and the ratio’s deterioration suggests continued cautious sentiment among market participants.
Analyst insights suggest potential regulatory or market shifts could arise from current conditions. Data and historical trends indicate that while the market is in a risky phase, it may set the stage for future reversals after prolonged lows.
