Bitcoin's (BTC) Risk-Reward Ratio Is Collapsing

BTC’s lull may not last long as weakening risk metrics and slowing miner outflows hint that volatility and recovery are brewing.

Optimism around the US government shutdown resolution was temporary as Bitcoin (BTC) noted a minor decline, falling below $105,000 on Tuesday. This comes at a time when the crypto asset is seeing its risk-reward balance fading fast.

But history suggests this kind of boredom often sparks explosive market comebacks.

Setup For Market Surprise?

According to Alphractal founder Joao Wedson, Bitcoin’s (BTC) risk-return profile has been weakening, as seen with both the annualized Sharpe Ratio and the Normalized Risk Metric (NRM) trending lower. He noted that the decline stems from BTC’s lackluster performance over the past year, which has dampened enthusiasm and limited new demand, particularly from institutional investors who remain cautious.

However, Wedson pointed out that historically, such low-confidence periods often lead to unexpected market moves. While Bitcoin could still move higher or even register a new all-time high, the analyst believes the strongest phase of the current cycle has likely passed. Statistically, the more probable outcome is that Bitcoin will enter a cooling-off phase next year to reset the broader market cycle. In the meantime, Wedson expects significant volatility to continue through December.

Meanwhile, Swissblock stated that Bitcoin is entering a critical consolidation phase after successfully defending an important support zone. The analytics platform went on to explain that the next step for BTC is to hold its current structure and reclaim the $108,000-$110,000 pivot range, which could serve as the trigger for renewed bullish momentum. Selling pressure has begun to ease, which could potentially mean that bearish exhaustion may be setting in.

While traders focus on short-term volatility, miner behavior hints at a gradual reduction in selling pressure.

Fewer Miner Sales

Bitcoin miners have been selling less over the past month, and total outflows have been steadily decreasing since late October. This drop suggests less immediate supply pressure on the market and may reflect improving miner sentiment. Historically, similar declines in miner outflows have often appeared before accumulation phases or recovery rallies, as less BTC moves to exchanges.