Bitcoin's Short-Term Sharpe Ratio Hits Record Low, Analyst Sees Market Rebound Ahead

Bitcoin's performance on the short-term Sharpe Ratio has been a topic of interest for market analysts. This metric measures excess return per unit of volatility and is often cyclical, with high values during bull markets and negative values during bear markets. According to data from CryptoQuant, Bitcoin's short-term Sharpe Ratio has dropped to -38.38.

This level is historically associated with low risk accumulation zones, where the market is underperforming in terms of risk-to-reward ratio. Market analyst Michaël van de Poppe believes this could be a sign of a brewing market rebound, similar to past instances in 2015 and 2022. Each time the Sharpe Ratio reached these levels, it preceded a major price rally.