In crypto, raw returns are easy to fake — just take bigger risk. The Sharpe ratio divides return by volatility, so it penalizes wild swings. A negative Sharpe ratio means the strategy is currently losing money relative to the risk-free rate, adjusted for volatility. This indicates the current configuration is not profitable on a risk-adjusted basis. With only 71 trades, the sample is small; the number is a sanity check, not a guarantee.
Research note · 2026-09-01
Sharpe Ratio -2.81: What It Means for Crypto Trading
A Sharpe ratio of -2.81 means the strategy is losing money relative to the risk-free rate per unit of volatility. This is poor performance, not good.
Sharpe Ratio -2.81: What It Means for Crypto Trading
Sharpe -2.81Risk-adjusted