The Sharpe ratio of Bitcoin has entered the zone of final pessimism of bear cycles.
The flagship indicator of Bitcoin's risk-adjusted returns — the Sharpe ratio — has plunged into territory historically preceding the bottom of a bear market. At the end of June, the metric reached -21, its lowest level since November 2022. In early July, the indicator broke through -20, followed by a partial correction, but the signal remains extremely alarming.
What the indicator says
The Sharpe ratio measures how much the asset's volatility is justified by its returns. A positive value indicates efficient use of risk, while a negative value means investors are taking on excessive volatility without adequate compensation. The current drop into "extreme negative" territory reflects Bitcoin's prolonged weakness: the leading cryptocurrency closed the third consecutive quarter in the red, with a decline of 14.09% over the last three months alone, according to CoinGlass data.
Spot pressure and futures pause
Meanwhile, analysts at the exitpump service are recording aggressive selling on the spot market: the spot CVD (cumulative volume delta) curve is steadily declining, while the futures CVD remains flat. This indicates that the main pressure comes from actual asset sales, not speculative positions. Such a pattern is typical of capitulation phases, when holders are forced to lock in losses.
Key support level
A trader under the pseudonym Killa highlights the $60,400–$60,900 zone as critical for further dynamics. "If we cannot hold this range upon retesting, I fear the price will head straight to the lows," he warns. Given that spot sales continue to intensify, the risk of a breakout below this level remains high.
My view
Historically, periods of extremely low Sharpe ratios have coincided with the final stages of bear cycles, followed by a strong recovery. However, the current macroeconomic uncertainty and lack of fresh catalysts could prolong this phase for weeks or even months. Investors should prepare for heightened volatility, but such moments often become entry points for long-term strategies.