Bitcoin’s realized profit and loss (P&L) ratio has plunged to its lowest level since late 2022, reaching a negative reading of -0.35, according to blockchain analytics firm CryptoQuant. This metric, which tracks the net percentage of Bitcoin supply currently in profit or loss, suggests widespread market losses but has often preceded significant price recoveries.
Historical data shows that when this ratio dips below -0.35, it accurately identifies market bottoms. Similar lows in 2015 and 2019 forecasted subsequent rallies in Bitcoin’s price. The current reading comes amid Bitcoin’s recent downturn, which included a 50% drop from its October peak of $126,080 to a near two-year low of around $58,190 in late June.
Market sentiment, heavily tested during this slump, showed cautious improvement as Bitcoin’s price recovered about 7% in the past 10 days. The slump was partly linked to fears surrounding Strategy, the largest corporate Bitcoin holder. Concerns arose after its preferred stock unit, Stretch (STRC), fell below its $100 par value, casting doubt on its dividend sustainability and rattling investor confidence.
Industry experts have suggested this correction may have purged excess leverage from the market. The Bitwise chief investment officer commented that recent events moved Bitcoin closer to a bottom and expected a new bull market could emerge by the fall.
Supporting this outlook, an analyst at Swan Bitcoin pointed out that Bitcoin’s current trading level is just 16% above its realized price—the aggregated cost basis of all Bitcoin on the network. Historically, buying at this proximity to realized price has yielded strong returns: 41% on average after six months and 81% after a year. Despite the psychological discomfort of investing during a downturn, waiting for a clear bottom often results in missed opportunities, the analyst warned.