Bitcoin may be approaching a major turning point after a key on-chain indicator reached its lowest level in more than three years, according to blockchain analytics firm CryptoQuant. The development has drawn attention from market analysts because similar signals in the past have often appeared near the end of major market downturns.
CryptoQuant reported that Bitcoin’s realized profit-and-loss (P&L) ratio has dropped to -0.35, the weakest reading in 43 months. The last time the metric reached such levels was in December 2022, following the collapse of cryptocurrency exchange FTX, when Bitcoin’s price briefly fell below $16,000.
The realized P&L ratio measures the percentage of Bitcoin being held at a profit or loss compared with the total circulating supply. Analysts use the indicator to assess investor sentiment and identify potential market trends. Historically, similar readings recorded in 2015 and 2019 were followed by strong Bitcoin recoveries, leading some experts to believe the current market could be nearing a bottom.
Although Bitcoin has declined nearly 50 percent from its October peak of $126,080, the cryptocurrency has recently shown signs of improvement. After dropping to around $58,190 on June 25, Bitcoin rebounded by more than 7 percent, signaling renewed buying interest.
Market observers said the recent price weakness was partly driven by concerns surrounding Strategy, formerly known as MicroStrategy. Investors reacted after the company’s perpetual preferred stock, Stretch (STRC), traded well below its $100 face value, raising questions about the long-term sustainability of its dividend structure.
Meanwhile, Matt Hougan, Chief Investment Officer at Bitwise Asset Management, believes the recent correction has removed excessive leverage from the market. He said this could help Bitcoin establish a stronger foundation before potentially entering another bullish phase later this year.
Separately, Adam Livingston of Swan Bitcoin noted that Bitcoin is currently trading only 16 percent above its realized price, which represents the network’s average acquisition cost. Historically, similar conditions have been followed by average gains of 41 percent over six months and 81 percent over one year. Livingston added that while buying during periods of weak market sentiment may feel risky, waiting for the perfect bottom often causes investors to miss valuable long-term opportunities.
