Bitcoin Enters Historic Buying Zone, Indicator Suggests

[Ben Graham]

Reports say a popular risk metric has fallen into territory that, in the past, lined up with major buying opportunities for Bitcoin.

The short-term Sharpe Ratio has plunged to about -38.38, a level that markets rarely see. Traders who follow on-chain and statistical signals point out that similar extremes showed up around the lows of 2015, 2019, and late 2022 — moments that later saw sizable recoveries, CryptoQuant verified author Moreno said.

Sharpe Ratio Hits Unusual Low

The Sharpe Ratio measures returns against volatility. When it drops far below zero over short stretches, it means investors have been taking heavy losses relative to how wildly the market is moving.

A -38.38 reading is extreme. Reports note this kind of reading has happened only four times in Bitcoin’s history, and each time followed a stretch of high stress and weak sentiment. That pattern suggests selling can exhaust itself even when the charts look bleak.

Bitcoin’s Short-Term Sharpe Ratio Hit a Level Historically Reserved For Generational Buying Zones

“The arrows in the chart illustrate this clearly: each prior extreme negative reading was followed by violent recoveries to new highs.” – By @MorenoDV_ pic.twitter.com/nxFBUgHxi9

— CryptoQuant.com (@cryptoquant_com) February 19, 2026

Historical Lows And Recoveries

Past cycles give one way to read the signal. Around $287 in 2015, and near $4,100 in early 2019, and again around $15,000 in late 2022, risk measures and mood were at their worst before money flowed back in.

Based on reports from on-chain analysts, those moments shared common traits: many traders had capitulated, volume was thin, and volatility spiked. Yet those conditions later coincided with multi-month rallies that erased large parts of the prior losses.

Bitcoin Price Action

Bitcoin’s price has been sensitive to headlines lately. It slid under psychological levels as risk assets weakened, and trading has been muted. Markets reacted to diplomatic rows and conflict-related stories, causing bigger moves in thin markets.

Sometimes BTC held up and brushed off sharp risk-off flows. Other times it fell further, especially when liquidity dried up. That stop-and-start behavior has left short-term traders cautious, while longer-term holders watch for signs that selling momentum is fading.

Clear Coast Ahead?

Based on reports and the data, this signal is not a magic ticket. External forces — such as tightening liquidity or a macro shock — can keep downward pressure longer than statistical patterns alone would predict.

The recent 50% fall from an all-time high near $126,200 in October 2025 to about $65,700 shows much of the move is already behind us, but it does not rule out more pain. Risk management matters. Position sizing and clear entry plans will help anyone who decides to act around these levels.

Featured image from Anne Connelly – Medium, chart from TradingView