Bitcoin's short-term Sharpe Ratio has plummeted to -38.38, one of the most negative readings on record, signaling extreme risk-adjusted underperformance. According to analyst Michaël van de Poppe, this level historically aligns with major market accumulation zones that preceded significant bull runs. Similar deeply negative Sharpe Ratio readings were observed in early 2015, early 2019, and late 2022, each period followed by strong multi-month and multi-year advances for Bitcoin.
Concurrently, Bitcoin's valuation relative to gold (the BTC/Gold ratio) has hit its lowest level ever, indicating that Bitcoin has been in a relative bear market against the precious metal for roughly 14 months since its peak in December 2024. Van de Poppe highlights that the weekly Relative Strength Index (RSI) for BTC priced in gold has reached historic lows matching the end of the three prior BTC/Gold bear cycles, each lasting about 14 months.
The analysis suggests that gold's powerful run above $5,000 an ounce, driven by geopolitics and central-bank buying, may have masked Bitcoin's underlying weakness in "real" terms. While Bitcoin trades around $68,000 in U.S. dollars, its performance measured in gold reveals a different rhythm. The convergence of these two metrics—the Sharpe Ratio crash and the BTC/Gold ratio bottom—points to a potential historic inflection point, often associated with market capitulation and long-term buying opportunities.
