[Analysis] Bitcoin risk-adjusted performance indicator 'at bottom'…"Reproduction of 2019·2020·2022 low ranges"

Bitcoin (BTC) risk-adjusted returns are effectively converging to '0', showing a flow similar to past major bottom phases, according to analysis.

On the 25th, crypto-focused media Cointelegraph, citing CryptoQuant analyst Moreno, reported that CryptoQuant's (on-chain) Bitcoin Sharpe ratio recently fell to near 0, re-entering the 'maximum uncertainty zone' as in 2019·2020·2022. It explained that the quality of Bitcoin investment returns has sharply declined.

CryptoQuant's Sharpe ratio indicator measures how much excess return an asset has generated over a risk-free asset, taking into account the asset's volatility. The closer the value is to 0, the more it indicates that there was almost no reward for taking risk. Generally, a region close to 0 appears to be the worst point for return relative to risk, but historically it is also considered an early signal that risk-adjusted expected returns may improve again. Moreno explained, "The current indicator is at a typical level observed at the onset when risk re-evaluation begins."

Moreno said, "It is not an indicator that guarantees a bottom, but it is a signal that the quality of future returns may improve if market stability and volatility normalization follow." Conversely, earlier this year when Bitcoin first surpassed 73,000 dollars, the indicator value soared to 50, reflecting a peak of an overheated phase.

At the same time, an unusual movement was observed on-chain. According to Glassnode, 8% of the total Bitcoin supply moved during the past week. This scale was recorded only twice in the past seven years (December 2018, March 2020), and both events occurred at bear-market sentiment lows. Joe Burnett, Bitcoin strategy director at Semler Scientific, described it as "a historically rare, massive on-chain change."

Meanwhile, Bitcoin fell about 23% (about 24,000 dollars) over the past ten days, sliding to the 82,000-dollar range, before partially rebounding to around 89,000 dollars as of the 25th.