Bitcoin (BTC $88,726.94) is showing that its rewards may no longer justify the risks, as its Sharpe Ratio — a measure of risk-adjusted returns — turns negative.

CryptoQuant data indicates that the metric reflects recent volatility that has not produced sufficient returns. Even after falling from October highs above $120,000, Bitcoin’s sharp intraday swings and uneven recoveries have compressed risk-adjusted gains.

Historically, Bitcoin’s Sharpe Ratio has gone negative during deep bear markets, including in late 2018 and 2022, and often stayed depressed for months. Some analysts and observers on social media suggest the latest reading could signal the end of Bitcoin’s downtrend and a potential start of a new bull cycle.

Analysts caution that a negative Sharpe Ratio does not forecast price direction. “It doesn’t call bottoms with precision,” said a CryptoQuant analyst. “It shows when risk-reward has reset to levels that historically precede major moves. We’re oversold—not because prices can’t go lower, but because the risk-adjusted setup favors long-term positioning.”

Traders usually watch for the ratio to rebound toward positive territory, which historically signals improving risk-reward conditions. For now, Bitcoin trades near $90,000 amid persistent volatility and underperformance versus gold, bonds, and global tech stocks.