BTC risk-reward ratio hits historic low, signaling potential surge

An analysis suggests that Bitcoin is exhibiting a signal previously observed only at major market bottoms. CryptoQuant contributor MorenoDV noted that BTC's short-term Sharpe Ratio, a measure of risk-adjusted returns, has fallen to -38.38. This indicates that losses relative to volatility have reached a maximum. MorenoDV explained that similar levels were seen at the end of 2015, 2019, and 2022, with each instance followed by a sharp rebound after hitting a major low. "Based on these past cases, the current period presents a highly favorable profit-to-loss expectation from a medium- to long-term perspective," he stated. "However, a macro liquidity shock could prolong the bottoming process."