Indicator Overview

The Sharpe Ratio (Top 10 Altcoin Index) indicator measures the risk-adjusted return of a dynamically constructed equal-weighted index comprising the top 10 altcoins (ETH, XRP, BNB, SOL, ADA, LINK, TRX, XMR, AVAX, LTC) 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 the index value 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 across major altcoins, indicating efficient altcoin bull markets, broad-based speculative inflows, narrative-driven strength, and favorable reward-to-risk conditions for altcoin exposure, while low or negative values reflect periods where volatility overwhelms returns, often during altcoin bear phases, capital rotation to Bitcoin, or sector-wide deleveraging. Divergences, such as the index value rising sharply while the Sharpe Ratio weakens, warn of unsustainable euphoria and potential tops, whereas index corrections accompanied by a recovering Sharpe Ratio suggest improving efficiency and upcoming sustainable altcoin rallies. Traders monitor crosses above zero for shifts into positive risk-adjusted regimes, sustained elevated readings for confirmation of healthy altseason trends, or breakdowns below supports as cues to reduce altcoin exposure in favour of Bitcoin or stable assets, enabling precise sector rotation, risk management, and cycle timing within the broader cryptocurrency market.