Bitcoin's Sharpe ratio has dropped to -23, a reading crypto analyst Ali Martinez says could be an optimal window for spot accumulation. The asset held near $65,000 after gaining nearly 4% over the past month, while the options market shows traders unwinding bearish bets. Other traders are not yet convinced the cycle low is in.
Bitcoin's Sharpe ratio has fallen to -23, a level crypto analyst Ali Martinez says could be an optimal window for spot accumulation. The asset held around $65,000 on Friday after gaining nearly 4% over the past month, and new data suggests the market may no longer be facing endless downside risk.
Seller exhaustion, not endless downside
The Sharpe ratio measures the return generated for each unit of risk. Martinez reads the -23 figure as deep seller exhaustion rather than unlimited downside, which he says creates an asymmetric risk-to-reward entry for long-term investors. He added that similar compressions in 2015, 2019, and 2022 coincided with final bear market capitulation phases.
Martinez had earlier flagged a rare setup on Bitcoin's monthly chart. On-chain metrics such as MVRV and CVDD still point to a possible cycle low between $40,000 and $50,000. Even so, he said three indicators — the RSI near 43.65, the CMO around -71, and a test of the 50-month moving average — have historically appeared near major market bottoms.
Grayscale points to the Fed
Grayscale put forward a similar view, arguing that Bitcoin's bottom may depend more on macroeconomic conditions than the four-year cycle. The asset manager said the cycle model points to a possible bottom around September or October, yet that the asset has matured and now moves increasingly with Federal Reserve policy and real interest rates. If the Fed avoids further rate hikes and growth stays resilient, Grayscale said, BTC may have already reached its low.
Options traders unwind hedges
The options market points in the same direction. Bitcoin's put/call open interest ratio has dropped to 0.52, from 0.76 in late June, according to Glassnode data cited by Crypto Briefing. A reading below 1.0 means call contracts outnumber puts, and the slide from mid-July levels around 0.56 to 0.59 points to a sustained unwind of bearish positioning.
The $75,000 hurdle
Not everyone agrees the bottom has formed. Trader Ardi said he would need to see Bitcoin break above $75,000 before treating the $57,000 low as the cycle bottom. That level, he said, marks the neckline of a double-bottom pattern from the previous range.
Reclaiming it would be the earliest sign the downtrend from $126,000 is losing validity. Even a breakout would not settle it for him.
Ardi added that accepting $57,000 as the low would imply the shallowest bear-market drawdown on record, with the trough arriving roughly three months earlier than in previous cycles.
Sources: CryptoPotato, Crypto Briefing
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