Joao Wedson's technical analysis has sparked heated discussion in the crypto community, with three charts suggesting a potential bearish trend shift in Bitcoin.
In his latest post on social media platform X, Wedson poses a key question: "How bearish are these charts?", and the data presented is worth paying attention to.
1. BTC Loses Trend Support Against the Russell 2000.
The first chart shows Bitcoin's performance against the Russell 2000 stock index. Over the past few years, the two have exhibited a strong correlation, especially during bull market phases.
However, Bitcoin has now fallen out of its long-term trend channel, which has acted as key support. From a technical perspective, a trendline violation against a stock market index like the Russell 2000 can indicate uptrend exhaustion and a potential reversal.
"The loss of this strong correlation is not a bullish signal; it could indicate that BTC will no longer be considered equivalent to a small-to-mid-cap growth asset going forward," Wedson stated.
2. Sharpe Ratio Weakens, Risk No Longer Rewarded Highly
The second chart from Wedson displays Bitcoin's Sharpe Ratio, an indicator that measures risk-adjusted return performance. Currently, the ratio is lower than in 2024. This indicates that investors' returns are no longer commensurate with the risks taken.
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In other words, Bitcoin is no longer compensating for risk as well as before, which could mean low volatility, a slow rally, or even a distribution phase.
"A falling Sharpe Ratio equates to the market losing its incentive to take large risks," he said.
3. BTC Has Yet to Set New Records in Many Fiat Pairs
The third chart shows that although the BTC/USD price is near its peak, Bitcoin has not yet broken all-time highs in many foreign currency pairs, such as BTC/EUR and BTC/RUB .
This suggests that the rally has not been evenly distributed globally, and could indicate that momentum is still limited to certain regions or demographics, rather than driven by universal adoption.
"I prefer to focus on more compelling alpha going forward. The primary market seems to be running out of steam," Wedson concluded.
