Bitcoin’s Realized Profit/Loss Ratio Hits a 43-Month Low
According to blockchain analytics platform CryptoQuant, Bitcoin’s realized profit/loss ratio has plummeted to -0.35, marking a 43-month low. This figure suggests significant losses in the market, although historically, such dips have often signaled market bottoms.
Bitcoin’s realized profit/loss ratio, which gauges the net profit or loss relative to the total supply of Bitcoin (BTC), hasn’t reached this low since December 2022, following the dramatic collapse of FTX. At that time, Bitcoin sank below $16,000.
“Historically, this indicator has marked Bitcoin’s bottom with great accuracy,” CryptoQuant stated on Thursday. In both 2015 and 2019, the realized P&L ratio also dropped below -0.35, right before it rebounded and prices surged.
This recent data might help improve market sentiment, which has dipped near record lows several times during Bitcoin’s stark 50% drop from its October peak of $126,080. Recently, however, sentiment has shown some cautious improvement, with Bitcoin climbing over 7% since it reached a nearly two-year low of $58,190 on June 25th.
Some analysts point to Strategy Inc., the largest corporate holder of Bitcoin, as partially responsible for the downturn. Concerns arose when its preferred stock, Stretch (STRC), fell below $75 (from a $100 par value), hinting at potential instability in its dividend model.
On Thursday, Bitwise Chief Investment Officer Matt Hogan remarked that the STRC situation likely eliminated excessive leverage, pushing the market closer to its bottom.
“As the market continues to stabilize, I believe we’re closer to the bottom than ever, and I expect a new bull market this fall,” he noted.
Swan Bitcoin analyst Adam Livingston mentioned that Bitcoin is now trading at just 16% above its realized price, based on the network’s total on-chain costs. Historically, this level has correlated with robust returns of 41% over six months and 81% over a year.
Livingston acknowledged that buying Bitcoin at this moment “feels terrible,” but he argued that this perception is what creates a discount.
“Waiting for the ‘bottom’ seems like a solid strategy, but it has one major flaw: bottoms never announce themselves,” he said, encouraging investors to buy now rather than risk paying too much later.
