Bitcoin Sharpe Ratio Falls to Lowest Level Since March 2023, Market Reversal Imminent

On February 9, CryptoQuant analyst Darkfost stated that the Bitcoin Sharpe ratio, which measures risk and potential return, has entered negative territory, consistent with late-stage bear markets. However, this does not mean the bear market is over, but rather indicates that the risk-reward ratio is approaching an extreme point. The current Bitcoin Sharpe ratio is -10, the lowest since March 2023.

Looking back at historical data, the Bitcoin Sharpe ratio reached lows at the end of 2022 to early 2023 and again at the end of 2018 to early 2019, both representing previous bear cycle lows. The last time the Sharpe ratio dropped to zero was in November 2025, when Bitcoin's price also touched a local low of $82,000. Analysts say that a negative Sharpe ratio typically signals an upcoming market reversal.