Cryptocurrency Analytics Firm Alphractal has published a new report outlining key market metrics suggesting that Bitcoin (BTC) will enter the consolidation phase in the coming weeks.
Their findings show that Bitcoin’s annual Sharp ratio is on the decline, reflecting past market cycles that saw periods of stagnation or correction.
The Sharp Rat, a metric used to assess risk-adjusted returns, fell to levels comparable to those seen in 2023, 2020, 2019, and 2016. As we approach zero, Alphractal analysts suggest that Bitcoin offers a lower return per unit of risk. Historically, similar trends followed by market pauses, suggesting that the integration phase could be the most likely outcome.
Another important indicator flagged by Alphractal is the yearly changes in Bitcoin that approaches negative territory. Of the four previous instances where this occurred, three produced bearish moves, while one had no major impact.
A decrease in Bitcoin’s historic volatility could indicate a lower volatility and a lower risk, reducing the market’s appeal for short-term speculative trading. If Bitcoin follows the observed patterns in 2020, it could be that they are simply going through a routine phase of integration. However, as the metric continues to move downward trend, the likelihood of new lows may increase.
Commenting on the current market outlook, Alphractal CEO Joao Wedson said that those who hope for an increase in volatility in the near future may need to be patient.
*This is not investment advice.
