Bitcoin Realized Profit-Loss Ratio Falls to 43-Month Low, Signaling a Bottom

Bitcoin’s realized profit-loss ratio has fallen to its lowest level in 43 months, a reading that has coincided with past market bottoms.

CryptoQuant said July 3 that the ratio dropped to -0.35. The indicator measures the net share of Bitcoin supply sitting in profit or loss relative to total supply. It has reached that level for the first time since Bitcoin fell below $16,000 in December 2022 after the collapse of FTX.

CryptoQuant said the metric has historically identified Bitcoin bottoms with a high degree of accuracy. In 2015 and 2019, prices rebounded after the realized profit-loss ratio fell below -0.35.

The latest reading is raising hopes that investor sentiment may recover. Bitcoin is down about 50% from its record high of $126,080 reached in October. It fell to $58,190 on June 25, its lowest level in nearly two years, before rebounding more than 7% over the past 10 days.

Analysts are also adding to the case for a market bottom. Matt Hougan, chief investment officer at Bitwise, said Strategy’s preferred stock Stride, or STRC, fell from its $100 par value to below $75, prompting the liquidation of overly leveraged positions. That means the market has likely moved one step closer to a bottom, he added, saying he is confident a new bull market will begin this fall.