Bitcoin’s realized profit and loss ratio has fallen to a 43-month low of -0.35, a figure that signals extreme market-wide loss conditions but has historically coincided with market bottoms, blockchain analytics platform CryptoQuant said.

The Bitcoin realized P&L ratio — which measures the net percentage of Bitcoin (BTC) in profit or loss relative to total supply — hasn’t fallen this low since December 2022, shortly after FTX shockingly collapsed and sent Bitcoin below $16,000.

“Historically the indicator has marked BTC bottoms with extreme precision,” CryptoQuant said on Thursday. In 2015 and 2019, the Bitcoin realized P&L ratio also fell below -0.35 before price rallies followed. 

Change in Bitcoin’s P/L ratio since 2012. The data was taken when Bitcoin was trading at $59,000. Source: CryptoQuant

The data could lift market sentiment, which has repeatedly fallen to near-record lows during the course of Bitcoin’s latest 50% drawdown from $126,080, set in October. Market sentiment has risen cautiously over the last 10 days, with Bitcoin up more than 7% since tanking to a near two-year low of $58,190 on June 25.

Many analysts blamed that drop on Strategy — the largest corporate Bitcoin holder — after its top perpetual preferred stock offering, Stretch (STRC), broke from its $100 par value to below $75, raising fears that its dividend model was unsustainable.

Related: Crypto Biz: Bitcoin maximalism meets the realities of capital markets 

On Thursday, Bitwise chief investment officer Matt Hougan said the STRC incident squeezed out excess leverage and likely moved the market one step closer to a bottom.

“As the market continues to sort things out, I’m convinced the bottom is closer than ever — and that we will enter a new bull market in the fall.”

Don’t wait for the bottom, analyst says

Swan Bitcoin analyst Adam Livingston noted that Bitcoin is currently trading only 16% above the realized price — the network’s aggregate on-chain cost basis — a level that has historically coincided with strong forward returns of 41% at six months and 81% at 12 months.

Livingston acknowledged that buying Bitcoin right now “feels awful,” but that’s precisely why it’s trading at a discount, he argued.

“Waiting for ‘the bottom’ is a wonderful plan with one flaw. The bottom never announces itself,” Livingston said, recommending investors buy now rather than overpay at the top.

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