Bitcoin’s Sharpe Ratio Plunges, Signaling Market Repercussions

Bitcoin’s Sharpe ratio has dropped below zero, a significant indicator of heightened volatility. This marks a worrying trend similar to the market turbulence following the FTX collapse in 2022. Cryptocurrency data platform CryptoQuant reported this decline on Monday. ETFs have also experienced outflows worth $3.5 billion last November, further showcasing a shift in investor sentiment. Analysts like CryptoQuant’s I. Moreno suggest these conditions could signify a market bottom or even reversal.