Bitcoin hovered around $65,000 on Friday, having gained nearly 4% over the past month. Fresh data suggests the market may no longer be exposed to unlimited downside risk.

Bitcoin's Sharpe ratio has dropped to -23, a level that crypto analyst Ali Martinez identifies as a potential optimal window for spot accumulation.

Seller Exhaustion

The Sharpe ratio — originally developed by Nobel laureate William F. Sharpe in 1966 and widely used in traditional portfolio management to compare assets on a risk-adjusted basis — quantifies the return generated per unit of risk or volatility. A positive reading signals that returns have exceeded risk, while a negative figure reflects periods of steep drawdowns for investors. Martinez explained that the current -23 reading points to deep seller exhaustion rather than boundless downside, producing an "asymmetric" risk-to-reward entry point for long-term BTC holders. He noted that comparable Sharpe ratio compressions occurred in 2015, 2019, and 2022, each aligning with final bear market capitulation phases.

Martinez had previously identified a rare technical setup on Bitcoin's monthly chart that has historically emerged near the end of prior bear markets. Although on-chain metrics such as MVRV and CVDD still suggest a possible cycle low between $40,000 and $50,000, Martinez highlighted that a combination of three technical indicators — the RSI near 43.65, the CMO around -71, and a test of the 50-month moving average — has historically appeared near major market bottoms.

Grayscale has echoed a similar perspective, arguing that BTC's market bottom may be shaped more by macroeconomic conditions than by the traditional four-year cycle. Bitcoin's four-year cycle has been closely associated with its halving events, which programmatically cut the rate of new supply issuance approximately every four years and have historically preceded major bull phases. While the cycle model suggests Bitcoin could bottom around September or October, the asset manager contended that Bitcoin has matured and is increasingly driven by broader economic trends, including US Federal Reserve policy and real interest rates. According to Grayscale, if the Fed refrains from further rate hikes and economic growth holds steady, BTC may have already reached its low.

The $75,000 Hurdle

Not all market participants share that conviction. Trader Ardi stated he would need to see Bitcoin break above $75,000 before considering the asset's $57,000 low as the definitive bottom of the current market cycle.

Ardi argued that $75,000 represents the neckline of the previous range's double-bottom pattern, and reclaiming that level would be the earliest indication that the higher-timeframe downtrend from $126,000 is starting to lose validity. Even so, he cautioned that a breakout alone would not be sufficient.

He said BTC would also need to either sustain an extended rally or trade sideways for several months — reminiscent of its February rally — to allow sufficient time to confirm that a lasting bottom has formed. At present, Ardi believes the evidence still weighs against that scenario, noting that Bitcoin has not undergone a "genuine" bottoming phase or a late-stage capitulation, but has instead continued "grinding lower."

He also observed that accepting $57,000 as the cycle low would imply the "shallowest" bear-market drawdown on record and a trough arriving roughly three months earlier than in previous cycles, despite the broader market structure remaining bearish. The divide between these perspectives underscores a broader question facing market participants: whether Bitcoin's price discovery is increasingly governed by macroeconomic forces such as monetary policy, or whether its internally driven supply schedule and cycle dynamics remain the dominant framework for timing major turning points.