Analyst: Bitcoin Sharpe Ratio briefly falls below -20, extreme pessimism may signal bottom formation

CoinFeed July 6 news, CryptoQuant analyst Darkfost pointed out that Bitcoin's Sharpe ratio once again touched extreme negative territory, falling below -20 before rebounding slightly. The Sharpe ratio is used to measure the relationship between investment risk and return; a negative value means relatively high risk relative to current returns, which aligns with Bitcoin's third consecutive quarterly decline (latest quarterly drop of 16.1%). From historical data, such periods of extreme pessimism often last weeks to months and correspond to a new bottom-building phase, followed by a price restart. The analyst stated that the data suggests we are currently approaching this phase, but it should be noted that this is an observation from a long-term timeframe.