Key Takeaways:
Bitcoin's profit-and-loss ratio dropped to its lowest level in 43 months, a metric that on-chain analysts at CryptoQuant said signals the market is entering a more advanced reset phase after the cryptocurrency's 50% drawdown from its October record.
"The bottom is closer than ever," Matt Hougan, chief investment officer at Bitwise, said in a note Thursday, adding that the recent STRC incident at Strategy — the largest corporate Bitcoin holder — squeezed out excess leverage and likely moved the market one step closer to a recovery. "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."
The UTXO Block P/L Count Ratio, which measures how broadly the market's profit base sits beneath price, currently stands at 5.9 — its lowest reading since the 2022 bear market and one of the lowest on record, according to CryptoQuant. The metric compares the aggregate profitability of blocks of unspent transaction outputs. When the ratio collapses toward the lower range, profitability compresses, losses become more widespread, and the market moves into a more advanced reset phase, the firm said.
Bitcoin traded at about $62,500 as of 14:00 UTC Friday, up more than 7% since tanking to a near two-year low of $58,190 on June 25. That drop was triggered partly by Strategy's Stretch (STRC) perpetual preferred stock breaking from its $100 par value to below $75, raising fears that its dividend model was unsustainable. Hougan said Strategy will likely become "a less important figure in Bitcoin in the next cycle" as investment banks, asset managers and sovereign wealth funds replace it as the primary demand driver.
Swan Bitcoin analyst Adam Livingston noted that Bitcoin is currently trading only 16% above its 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. "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.
RSI divergences add to the case
Relative strength index cues across multiple time frames are locking in bullish divergences with price, a pattern that has accompanied some of the most significant trend changes in Bitcoin's history, including the end of its previous bear market in late 2022. Pseudonymous trader Heisenberg noted that the last two oversold RSI divergences formed bottoms, while recent drops had no such divergences — until now.
On the fate of the $60,000 level, commentator Exitpump drew a comparison to the 2022 bear market, when Bitcoin spent several months interacting with the $30,000 mark before finally losing it as support and putting in its cycle low around five months later. "60K now reminds me of 30K in 2022," they wrote.
CryptoQuant contributor I. Moreno said the P&L ratio compression is "Bitcoin's first bottoming flag" of the current bear market, but cautioned that the market may still need to absorb more stress before the bearish phase can fully exhaust itself. "If history is a guide, the market may still need to absorb more stress before the bearish phase can fully exhaust itself," Moreno wrote.
This article is for informational purposes only and does not constitute investment advice.
