Bitcoin’s realized profit-loss ratio fell to a 43-month low of -0.35, a number that signals extreme loss conditions across the market but has historically coincided with market lows, blockchain analytics platform CryptoQuant reported.
Bitcoin’s realized profit and loss ratio – which measures Bitcoin’s (BTC) net percentage in profit or loss relative to its total supply – hasn’t dropped this low since December 2022, shortly after FTX’s shocking collapse and sending Bitcoin below $16,000.
“Historically, the indicator has marked BTC bottoms with extreme precision,” CryptoQuant he said on Thursday. In 2015 and 2019, Bitcoin’s realized profit-loss ratio also fell below -0.35 before price increases occurred.
Change in Bitcoin’s profit and loss ratio since 2012. The data was collected when Bitcoin was trading at $59,000. Source: CryptoQuant
The data could lift market sentiment, which has repeatedly plummeted to near-record lows during Bitcoin’s recent 50% decline from $126,080 set in October. Market sentiment yes He is risen cautiously over the past 10 days, with Bitcoin up more than 7% since falling to a near two-year low of $58,190 on June 25.
Many analysts blamed the decline on Strategy – the largest corporate holder of Bitcoin – after its top perpetual preferred stock offering, Stretch (STRC), fell from a par value of $100 to below $75, raising concerns that its dividend model is unsustainable.
Related: Crypto Biz: Bitcoin maximalism meets the realities of capital markets
On Thursday, Bitwise chief investment officer Matt Hougan said the STRC incident had eliminated excessive leverage and likely moved the market a step closer to the bottom.
“As the market continues to improve, I am confident that the bottom is closer than ever and that we will enter a new bull market in the fall.”
Don’t wait for the bottom, says the analyst
Swan Bitcoin analyst Adam Livingston excellent that Bitcoin is currently trading just 16% above its realized price – the total cost of the on-chain network – a level that has historically coincided with forceful forward returns of 41% after six months and 81% after 12 months.
Livingston admitted that buying Bitcoin right now “feels terrible,” but argued that’s why it’s trading at a discount.
“Waiting for a bottom is a great plan with one drawback. A bottom never promises to happen on its own,” Livingston said, advising investors to buy now rather than overpay at the top.
