Bitcoin’s Sharpe ratio has significantly dipped into negative territory, reflecting its poor risk-adjusted performance. This indicates high volatility that does not correspond with inadequate returns, leading to cautious market sentiments.
Historically, negative Sharpe ratios foreshadow extended bearish periods, as previously seen in 2018 and 2022. Analysts highlight the need for a positive shift in the ratio to potentially initiate a new bull market.
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