Bitcoin has again approached levels of a low-risk indicator that overlapped with past long-term accumulation phases.

On June 16, local time, Cointelegraph reported that bitcoin's Sharpe ratio fell to -20 on June 11, and long-term investor wallets absorbed 125,000 BTC in June.

The Sharpe ratio compares returns with volatility. Since 2015, there have been cases in which bitcoin formed a bottom after the indicator fell below -20 in each major bear market. After first entering that range on Jan. 5, 2015, it remained there until June 12 and then moved into a recovery phase. Similar moves were repeated from Dec. 8, 2018 to March 7, 2019, and from Oct. 7, 2022 to Jan. 7, 2023.

This time, on-chain indicators also pointed in a similar direction. Bitcoin held on exchanges fell from 2.79 million BTC in February to 2.71 million recently. It briefly rebounded from an annual low of 2.65 million BTC to 2.73 million BTC between late April and early June, but about 12,000 BTC then left again over the following two weeks.

Over the same period, accumulation by long-term holding wallets became more pronounced. Their cumulative purchases more than doubled to 240,000 BTC from 115,000 BTC over the first two weeks of June, and the amount absorbed from June 1 to 14 alone was 125,000 BTC. As bitcoin moves to wallets with a stronger holding history than circulation, it is read as a signal that accumulation demand has increased.

The article also said a single indicator cannot identify a market bottom. It said periods in which the Sharpe ratio stayed below -20 generally coincided with an "extended accumulation phase" rather than an immediate rebound, and that the same pattern could continue this time.

Mid- to long-term trend lines still place more weight on a continuing correction than on a recovery. Bitcoin has traded below the 100-week simple moving average, currently at about $88,466, for 133 consecutive days. In past cycles, leaving this zone was not brief. After the 2013 peak, it spent 378 days below the 100-week line, moving between $200 and $400, and in the 2018 to 2019 bear market it stayed between $3,000 and $6,000 for 175 days.

The longest case came after the 2022 downturn. Bitcoin then spent 532 days below the 100-week line, with the price moving between $16,000 and $25,000. Averaging the three cases, bitcoin only regained the trend line and formed a sustained upward flow after spending about 362 days below the 100-week line.

As a result, the current period of 133 days is still short of the past average. Previous cases showed that the sideways phase below the 100-week moving average continued for several more months before bitcoin recovered that level. The focus for markets is not whether there is a short-term rebound, but whether the decline in exchange balances and the absorption by long-term holding wallets can persist enough to lead to an actual trend shift.

The significance of these signals lies in simultaneous changes in supply and demand and in risk-adjusted returns rather than in the price itself. As the drop in exchange balances and the expanding absorption by accumulation addresses appear together, they are serving as a yardstick for whether the bitcoin market is closer to a long-term accumulation phase than to a short-term rebound.