Bitcoin (BTC), Worst Loss in 43 Months...Has It Hit Rock Bottom?

▲ Bitcoin (BTC)

Bitcoin (BTC)'s realized profit/loss ratio has fallen to its lowest level since late 2022, and the market is once again testing its direction between extreme loss territory and signs of a bottom.

According to cryptocurrency media outlet Cointelegraph on July 4 (local time), blockchain analytics platform CryptoQuant stated that Bitcoin's realized profit/loss ratio dropped to -0.35. This figure is the lowest in the past 43 months. The realized profit/loss ratio is an indicator that measures the net proportion of Bitcoin in profit or loss relative to the total supply.

CryptoQuant explained that Bitcoin's realized profit/loss ratio has not been this low since December 2022. At that time, Bitcoin fell below $16,000 after the FTX collapse. CryptoQuant stated, “Historically, this indicator has marked Bitcoin bottoms with extreme precision.” In 2015 and 2019, price rebounds also followed after the realized profit/loss ratio dropped below -0.35.

This indicator comes amidst Bitcoin's 50% correction from its October high of $126,080. Market sentiment has cautiously recovered over the past 10 days, with Bitcoin rebounding more than 7% after falling to $58,190 on June 25. Cointelegraph mentioned Strategy's preferred stock Stretch (STRC) falling from its face value of $100 to below $75 as the background for the previous decline.

Matt Hougan, Chief Investment Officer at Bitwise, diagnosed that the STRC incident flushed out excessive leverage and the market moved one step closer to the bottom. Hougan said, “While the market continues to consolidate, the bottom is closer than ever, and I am confident that we will enter a new bull market in the fall.” Adam Livingston, an analyst at Swan Bitcoin, also pointed out that Bitcoin is currently trading 16% above its realized price.

Livingston explained that this range has historically been associated with strong leading returns of 41% after 6 months and 81% after 12 months. He admitted that buying Bitcoin now “feels terrible” but argued that this very reason is why it is trading at a discounted price. He added, “The plan to wait for the bottom has one flaw: the bottom doesn't announce itself.” With the loss indicator reaching a 43-month low, the key issue in the Bitcoin market is whether fear will deepen further or act as a starting point for a rebound, as in the past.

[Article Key Summary]

-Bitcoin's realized profit/loss ratio dropped to -0.35, marking its lowest level since December 2022.

-CryptoQuant explained that price rebounds also occurred in 2015 and 2019 after this indicator fell below -0.35.

-Matt Hougan and Adam Livingston provided analyses suggesting that the market is close to its bottom.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*