Bitcoin’s realized profit and loss ratio has dropped to a 43-month low of -0.35, signaling extreme market-wide loss conditions that have historically coincided with market bottoms, according to blockchain analytics platform CryptoQuant.
The ratio measures the net percentage of bitcoin in profit or loss relative to total supply.
It hasn’t fallen this low since December 2022, shortly after FTX’s collapse dragged bitcoin below $16,000.
Historical bottom signal
CryptoQuant noted the indicator’s strong track record for calling turning points:
“Historically the indicator has marked BTC bottoms with extreme precision.”
In both 2015 and 2019, the realized P&L ratio fell below -0.35 before price rallies followed.
The data could lift sentiment, which has repeatedly touched near-record lows during bitcoin’s 50% drawdown from its October peak of $126,080.
Bitcoin has climbed more than 7% since dropping to a near two-year low of $58,190 on June 25.
Many analysts blamed that drop on Strategy after its Stretch (STRC) preferred stock broke from its $100 par value to below $75, raising fears about its dividend model.
Bottom ‘closer than ever’
Bitwise chief investment officer Matt Hougan said the STRC incident squeezed out excess leverage and moved the market a step closer to a bottom:
“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.”
Don’t wait for the bottom
Swan Bitcoin analyst Adam Livingston noted bitcoin is trading only 16% above the realized price, a level that has historically produced forward returns of 41% at six months and 81% at 12 months.
Livingston acknowledged buying now “feels awful,” but argued that is exactly why it trades at a discount:
“Waiting for ‘the bottom’ is a wonderful plan with one flaw. The bottom never announces itself.”
