Data indicates that the Tron Sharpe ratio has seen a rapid increase in an area that has proven bearish for TRX value in the past.
The Sharpe ratio may indicate that Tron is overheating now
As one of the analysts at CryptoQuant Quicktake explained mailthe 180-day Tron Sharpe ratio is now flashing a red alert. The Sharpe ratio here refers to an indicator that compares the returns of a particular asset with its risks.
Its value is calculated as the difference between an asset’s expected return and its risk-free rate of return, divided by its volatility. This measure tells us whether the returns of a commodity are worth the risk involved.
Below is the chart shared by Quantity that shows the trend in the 180-day release of the Sharpe ratio for Tron over the past few years:
The value of the metric seems to have been sharply going up in recent days | Source: CryptoQuant
As the chart above shows, the 180-day Tron Sharpe ratio has recently seen some rapid growth and reached what has historically been the “red” zone.
In the chart, Quantitative Measurement highlighted instances of gauge breakouts into this area over the past few years. TRX generally seems to have reached some peak whenever the value of the indicator rises that high.
Tron is now inside the same high-risk zone again, but the coin will likely not reach the top right away, as the indicator is still at a lower level than it was during some of the peaks. But the analyst warns:
While TRX may continue its upward trend in the short term, holding positions in a high-risk area like this can be detrimental. The potential for gains becomes limited compared to the increased likelihood of a sharp decline, making this an unsuitable situation for long-term strategies.
It remains to be seen how the price of the cryptocurrency will develop from now on, taking into account the trend shown by the 180-day Sharpe ratio.
In some other news, the supply of Tether’s stablecoin, USDT, has recently seen significant growth in the TRON network, as noted by CryptoQuant Community Analyst Martin at X mail.
The value of the metric appears to have been sharply going up recently | Source: @JA_Maartun on X
USDT supply on Tron has risen from $47.75 billion to $65.7 billion over the past year, representing an increase of more than 37%. This rise naturally shows how interest in using stablecoins on the network has increased.
TRX price
TRON broke through the $22 level a few days ago, but it appears that the asset has since seen a slowdown in bullish momentum, with its price now trading around $20.
Looks like the price of the coin has observed considerable growth over the last few weeks | Source: TRXUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart from TradingView.com
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