Analysis: The Sharpe ratio of Bitcoin has fallen below 0, which may indicate a major bottom signal

According to CryptoQuant data, the Sharpe ratio of Bitcoin has fallen below 0, reaching its lowest level since the FTX collapse. Additionally, the chart shows multiple instances where the Sharpe ratio has dropped to zero or near zero, usually accompanied by price bottoms or significant reversals in Bitcoin.

The Sharpe ratio is a measure of the relationship between investment return and risk. A Sharpe ratio close to zero typically indicates that price volatility is high, but returns are insufficient to compensate for the risk, which often occurs at market bottoms or during capitulation phases.