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Bitcoin profit and loss ratio falls to 43-month low
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Bitcoin’s realized profit and loss ratio has plummeted to a 43-month low of -0.35, a level historically associated with market bottoms, according to blockchain analytics firm CryptoQuant. The metric measures the net percentage of Bitcoin in profit or loss relative to total supply, signaling extreme loss conditions across the market. This marks the lowest point since December 2022, when the collapse of FTX sent Bitcoin below $16,000.
The realized P&L ratio has previously shown precision in identifying Bitcoin bottoms. CryptoQuant noted that similar readings occurred in 2015 and 2019, both preceding significant price rallies. The current figure comes amid a broader downturn that saw Bitcoin drop roughly 50% from its October high of $126,080 to a near two-year low of $58,190 on June 25. Since then, Bitcoin has recovered more than 7%, with cautious optimism returning to the market.
The recent sell-off has been partly attributed to concerns over Strategy, the largest corporate Bitcoin holder, after its perpetual preferred stock Stretch (STRC) fell below its $100 par value to under $75. This raised fears about the sustainability of its dividend model, contributing to market weakness. Analysts believe the incident helped flush out excess leverage, potentially paving the way for a recovery.
Bitwise chief investment officer Matt Hougan expressed confidence that the bottom is approaching. “As the market continues to sort things out, I’m convinced the bottom is closer than ever — and that we will enter a new bull market in the fall,” Hougan said. His remarks offer a bullish perspective amid the prevailing pessimism.
Swan Bitcoin analyst Adam Livingston provided a more immediate tactical view. He noted that Bitcoin is trading only 16% above its realized price, the network’s aggregate on-chain cost basis. Historically, such levels have generated strong forward returns: 41% over six months and 81% over twelve months. Livingston acknowledged that buying now “feels awful” but argued that waiting for the exact bottom is a flawed strategy. “The bottom never announces itself,” he said, recommending investors buy at current discounts rather than overpaying later.
Looking ahead, the combination of extreme loss conditions and historically reliable bottom indicators suggests a potential turning point. While short-term volatility remains, the perspectives from Hougan and Livingston point to an improving risk-reward profile. The market’s ability to stabilize above recent lows will be critical in confirming whether the current level indeed marks a durable bottom. Investors are watching closely for further signs of recovery.
