Analysis: Bitcoin's 365-day Sharpe ratio has fallen to its lowest since 2022, historically corresponding to bear market bottoms multiple times.

BlockBeats news, July 6, according to CryptoQuant data, Bitcoin has fallen approximately 28% year-to-date, and its 365-day rolling Sharpe Ratio once dropped to around -21, the lowest level since the end of 2022, and is currently still near -20.

The Sharpe Ratio is used to measure an asset's risk-adjusted return performance. A negative value means investors have taken on higher volatility risk but actual returns are lower than risk-free assets (such as 10-year U.S. Treasury bonds). Against the backdrop of the current roughly 4.45% yield on U.S. Treasuries, this indicator reflects a significant deterioration in Bitcoin's risk-return performance over the past year.

However, CryptoQuant points out that historically, when the Sharpe Ratio falls to such an extreme negative level, it often indicates that market selling pressure is nearly exhausted. Similar levels were seen near the bottoms of the bear markets in 2015, 2019, and 2022, each followed by a new upward cycle for Bitcoin.