Indicator Overview

The Sharpe Ratio (SOL) indicator measures Solana’s risk-adjusted return by calculating the annualised excess return over a risk-free rate (fixed at 3%) divided by the standard deviation of returns, using user-selectable rolling windows (90-day, 180-day, 365-day, or 730-day). The metric is displayed on the primary axis with a dual-gradient colour scheme, red intensifying for negative values (poor risk-adjusted performance) and bright green intensifying for positive values (strong risk-adjusted performance), while Solana’s price is overlaid on a secondary logarithmic axis in white for contextual reference.

How To Use

High and rising Sharpe Ratio values (especially above 1.0–2.0) signal strong risk-adjusted outperformance, reflecting efficient Solana bull markets, explosive ecosystem growth (e.g., meme coin surges, DeFi migration, high-throughput adoption), and highly favourable reward-to-risk conditions for holding or entering positions, while low or negative values expose periods of extreme volatility outpacing returns, often during network outages, sharp drawdowns, or post-hype corrections typical of high-beta assets. Divergences, such as SOL price reaching new highs while the Sharpe Ratio weakens or turns negative, warn of unsustainable speculative momentum and heightened reversal risk, whereas price retracements accompanied by a recovering Sharpe Ratio suggest improving efficiency and potential for renewed upside. Traders monitor crosses above zero for shifts into positive risk-adjusted territory, sustained elevated readings for confirmation of healthy trends, or breakdowns below supports as cues to reduce exposure, enabling precise timing of entries, risk management, and cycle navigation in this volatile layer-1 cryptocurrency.