Bitcoin Sharpe ratio drops to negative, high volatility not matched by returns

CryptoQuant data shows that Bitcoin's Sharpe ratio has fallen into negative territory, reaching levels seen during the market crashes of 2018-2019 and 2022, reflecting poor risk-adjusted performance. Currently, Bitcoin's price has dropped from its historical high of over $120,000 in October 2025 to around $90,000, but market volatility remains high. A negative Sharpe ratio indicates that the returns from holding Bitcoin are insufficient to compensate for its price volatility risk. Historical data shows that this indicator may remain negative for several months after prices stop falling sharply, but it is not a bottom signal. Analysts point out that a return of the Sharpe ratio to positive values is usually associated with the start of a bull market, but there is currently no such sign.