Bitcoin is currently exhibiting a signal that has appeared only three times in recent years. With Bitcoin hovering around $87,000, a rare situation is emerging that, according to previous cycles, often preceded major movements. However, opinions are divided: some analysts see opportunities, while others warn that the current recovery could be a trap.
The Signal on the Bitcoin Chart #
According to an analysis by CryptoQuant, Bitcoin’s Sharpe ratio has fallen back towards zero. The Sharpe ratio is a metric that shows the return of an investment relative to its risk. A low ratio essentially means that an investor is taking a lot of risk for relatively little extra reward.
We saw this situation occur in 2019, 2020, and 2022. Back then, the Sharpe ratio remained low for an extended period before Bitcoin shot up again. Analysts consider such moments interesting for investors looking for opportunities when the market still feels uncertain. Often, a period with a low Sharpe ratio can later turn out to be a better entry point once the market calms down.
Nevertheless, CryptoQuant warns that this is not yet a clear sign that the trend has reversed. Despite the recovery, the market could remain volatile, according to the firm. Analyst Doctor Profit agrees, stating that the recent rise is mainly caused by traders needing to regain confidence, not by a fundamental improvement.
What Are Other Analysts Expecting Now? #
Other analysts are now looking for signs of recovery. BitBull, for example, notes that Bitcoin is closing above the four-hour SMA-20 for the first time in weeks, an average that often indicates a change in the short-term trend. If Bitcoin also closes above approximately $92,000, he believes the price could rise towards $105,000 to $110,000.
Michaël van de Poppe is looking at the bigger picture. He sees patterns similar to previous panic moments, such as the FTX crash. In such a phase, Bitcoin usually moves sideways first, followed by a cautious recovery. He therefore expects Bitcoin to potentially continue moving between $90,000 and $96,000 in the coming week.
The market is thus at a crossroads. A rare signal, divided advice, and a volatile technical situation mean the coming weeks will likely determine which direction Bitcoin will truly take.