Bitcoin profit and loss ratio falls to a 43-month low

Bitcoin's realized profit and loss ratio has fallen to -0.35, its lowest reading in 43 months, according to blockchain analytics platform CryptoQuant. The on-chain gauge signals extreme market-wide loss conditions, but it has historically marked cycle bottoms with precision—prompting Bitwise CIO Matt Hougan and Swan Bitcoin analyst Adam Livingston to argue investors may be looking at a discounted entry rather than further capitulation.

Key Takeaways

• CryptoQuant reported the bitcoin profit and loss ratio hit -0.35, a level not seen since December 2022, shortly after the FTX collapse sent BTC below $16,000.
• The metric measures the net percentage of Bitcoin supply in profit or loss and previously fell below -0.35 in 2015 and 2019 before price rallies followed.
• Bitwise CIO Matt Hougan said the STRC incident squeezed excess leverage and that a new bull market could begin this fall.
• Swan Bitcoin's Adam Livingston noted BTC trades roughly 16% above its realized price, a setup historically tied to strong forward returns.
• US spot Bitcoin ETFs logged $221.7 million in net inflows on Thursday as Bitcoin reclaimed the $61,000 level, per Cointelegraph's daily market roundup.

What Is Bitcoin's Profit and Loss Ratio?

The Bitcoin realized profit and loss ratio tracks the net percentage of BTC held in profit versus loss relative to total supply. When the reading turns deeply negative, more coins are changing hands at a loss than at a gain—a pattern CryptoQuant associates with capitulation phases.

On Thursday, CryptoQuant said the indicator "has marked BTC bottoms with extreme precision." Data cited in the report was captured while Bitcoin traded near $59,000, during a drawdown of roughly 50% from October's $126,080 peak.

For broader context on how on-chain signals interact with price action, see our Fintech & Crypto Alerts coverage.

Why Did the Ratio Fall to a 43-Month Low?

Bitcoin's latest selloff pushed sentiment to near-record lows. The asset tanked to a near two-year low of $58,190 on June 25 before rebounding more than 7% over the following 10 days, according to Cointelegraph.

Bitwise chief investment officer Matt Hougan linked the stress to the STRC incident, which he said squeezed out excess leverage across crypto markets. That deleveraging, he argued on Thursday, likely moved Bitcoin one step closer to a cycle bottom.

Market sentiment has risen cautiously even as the Crypto Fear & Greed Index registered "Extreme Fear" at 11 out of 100 on Friday, per Cointelegraph's daily roundup.

Does a Low Profit and Loss Ratio Mean Bitcoin Has Bottomed?

CryptoQuant's historical read suggests deep negative readings often precede recoveries, but no single metric confirms a bottom in real time. The platform noted the ratio also dropped below -0.35 in 2015 and 2019 before substantial rallies.

Hougan stopped short of calling an exact floor. Still, he wrote: "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."

Separately, the Major County Sheriffs of America shifted its CLARITY Act stance to neutral on Friday while continuing to push for amendments giving local agencies more resources to investigate digital-asset crime—a regulatory development tracked in the same day's crypto headlines.

What Are Analysts Saying About Buying Bitcoin Now?

Swan Bitcoin analyst Adam Livingston pointed to Bitcoin trading only 16% above the realized price—the network's aggregate on-chain cost basis. That gap has historically coincided with forward returns of 41% at six months and 81% at 12 months, he said.

Livingston acknowledged that buying now "feels awful," but argued that discomfort is exactly why Bitcoin trades at a discount. "Waiting for 'the bottom' is a wonderful plan with one flaw. The bottom never announces itself," he said, recommending investors buy now rather than overpay at the top.

Spot ETF flows offered a counterpoint to the fear. US-listed spot Bitcoin ETFs attracted $221.7 million in net inflows on Thursday—their largest single-day intake since early May—ending a 10-day streak of outflows that totaled more than $2.7 billion.