The BTC Sharpe Ratio has broken 0! Is this a signal that the bottom is coming?

Just saw CryptoQuant data: The Sharpe ratio of BTC has fallen below 0, reaching the lowest since the FTX collapse.

Let me explain this indicator first: The Sharpe Ratio is the ratio of "return/risk". A value below 0 indicates that there is currently high volatility, but the returns do not cover the risks at all, which generally occurs during panic selling or at the bottom phase of the market.

Reviewing historical data is more interesting—when this indicator dropped near 0 in 2019, 2020, and 2022, it was followed by a major bottom reversal for BTC. However, it is important to note: in the previous instances of breaking below 0, it took quite a long time at low levels before it started to rise.

Now that this signal has come out, can we slowly start looking for buying opportunities? But don’t rush in, after all, the bottoming phase might still take a while. How long do you think it will take to reverse this time?

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