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 being tested for direction between an extreme loss zone and a bottom signal.

According to Cointelegraph, a cryptocurrency specialized media outlet, on July 4 (local time), blockchain analytics platform CryptoQuant announced that Bitcoin's realized profit/loss ratio dropped to -0.35. This figure is the lowest level in the past 43 months. The realized profit/loss ratio is an indicator that measures the net proportion of Bitcoin in a profit or loss state 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 shock. CryptoQuant stated, “Historically, this indicator has marked Bitcoin bottoms with extreme precision.” In 2015 and 2019, price rebounds followed after the realized profit/loss ratio fell below -0.35.

This indicator comes amidst Bitcoin undergoing a 50% correction from its October high of $126,080. Market sentiment has cautiously recovered over the past 10 days, and Bitcoin has rebounded by more than 7% after falling to $58,190 on June 25. Cointelegraph cited the incident where Strategy's preferred stock Stretch (STRC) fell below $75 from its par value of $100 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 forward returns of 41% after 6 months and 81% after 12 months. He admitted that buying Bitcoin now “feels terrible” but argued that it is precisely why it is trading at a discounted price. He added, “The plan of waiting for the bottom has one flaw: the bottom doesn't announce itself.” With the loss indicator now at a 43-month low, the key issue for the Bitcoin market is whether fear will deepen further or act as a starting point for a rebound, as it has 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 in 2015 and 2019, a price rebound also occurred after the indicator fell below -0.35.

-Matt Hougan and Adam Livingston presented analyses suggesting the market is nearing a 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.*