The short-term Sharpe ratio for Bitcoin has dropped to a level that historically precedes price lows, noted CryptoQuant analyst Ignacio Moreno de Vicente.

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

The ratio reached -38.38, a level previously recorded before market reversals in 2015, 2019, and late 2022.

The Sharpe ratio measures risk-adjusted returns. A deeply negative short-term indicator signifies not just low profitability but maximum loss per unit of volatility—indicating a sharp and deep decline. For many participants, this is a capitulation point.

“The deepest drops in the indicator have not marked the beginning of prolonged bear markets. They indicated the exhaustion of selling pressure. The arrows on the chart clearly demonstrate this: each extreme negative reading was followed by a rapid recovery to new highs,” the expert explained.

According to him, from a probabilistic standpoint, the risk-reward ratio for medium- and long-term positions appears “asymmetrically favorable.” The risk of further declines is largely priced into momentum indicators.

The main threat, Moreno de Vicente noted, is a macroeconomic liquidity shock that could prolong the bottom formation process.

At the time of writing, Bitcoin is trading around $66,800, having dropped 2% in the last 24 hours.

Hourly BTC/USDT chart from Binance. Source: TradingView.

Another Signal of a Bottom

The stress level of short-term Bitcoin holders (STH) has fallen to levels seen at the bottom of the bear market in 2018.

Bollinger Bands for STH indicate record oversold conditions for the asset over the past eight years. This metric measures the gap between the current cryptocurrency price and the average purchase price of those holding coins for less than 155 days.

Bitcoin STH Bollingers most oversold in 8 years pic.twitter.com/tHyBv3V1Ge

— Quinten | 048.eth (@QuintenFrancois) February 17, 2026

A breach of the lower band indicates that Bitcoin has fallen significantly below the entry price of recent buyers, exceeding typical historical volatility.

Historically, this signal has coincided with the formation of a global bottom. In late 2018, a similar oversold condition preceded a 150% rise over the next 12 months and a 1900% increase over three years.

A similar signal appeared before the lows of November 2022, followed by a 700% rally to a new all-time high of around $126,000.

Previously, analysts at Matrixport pointed to the formation of a “sustainable bottom” and the exhaustion of selling pressure here. However, CryptoQuant specialists doubted the completion of the first cryptocurrency's correction.

Return to Accumulation

Major investors have changed their strategy: after six months of distribution, they have returned to accumulation, according to CryptoQuant analyst Burak Kesmeci.

Are long-term investors in Bitcoin switching back to accumulation?

Looking at the last six months, there was a clear wave of selling. Long-term holders (LTH) gradually sold off their holdings when prices were high. But since January 12, 2026, something has changed.

Buying has resumed,… pic.twitter.com/ORq6bJb9b5

— Burak Kesmeci (@burak_kesmeci) February 18, 2026

He noted that the shift occurred after January 12, when Bitcoin's price fell into the range of $62,000 to $68,000. Data from the beginning of the year confirms that accumulation by long-term holders (LTH) has increased to 115,000 BTC, while selling pressure has nearly vanished.

“The most patient investors in the market are back in the game,” the expert remarked.

However, Kesmeci doubts that the current pace of buying will be enough to reverse the trend. Despite the return of LTH, there is currently no significant momentum.

The analyst believes that the dynamics of purchases in the coming weeks will be crucial.

“Historically, such a picture often precedes a lull before a major movement. At the very least, one can say that the selling pressure from long-term holders has ended. At least for now,” he concluded.

Recall that analysts at K33 identified signals of a late bear phase in Bitcoin.