On-Chain Analysis: Actual P/L shows BTC has bottomed or is very close to it

In this article, CoinCu will be looking at on-chain metrics for Bitcoin (BTC), more specifically those related to actual profit/loss.

2018-2020 actual loss of BTC

The Actual Loss (RL) indicator measures the total loss (in USD) of all BTC that moved on a given day with the price below when it was bought. However, this index only counts coins that were sold at a loss. Therefore, loss holders are ignored.

Actual casualties typically peak during the surrender phase. At this point, investors who bought near the top give up their investment and sell at a loss. Very often this marks the bottom before the trend reverses.

During the 2018-2020 correction, BTC’s actual losses (black circle) tripled:

• February 6, 2018: Loss of $556 million
• December 6, 2018: $336 million loss
• March 13, 2020: Loss of $462 million

All three periods mark a bottom before the price increases significantly. This became particularly clear on March 13, when it marked the all-time low before the start of the current uptrend.

The source: glass node

Current all-time high loss

Since BTC price is higher now than it was in 2018-2020, it means actual losses will be bigger than before.

The current all-time high in actual loss is $1,549 billion, hit on May 21st. This level does not mark an all-time low, which was reached at the second spike on June 25 (the round black circle).

After that, the actual losses doubled during the current move down, specifically on December 6th and February 3rd (red circle).

Losses have decreased significantly since the second surge, after which the price of BTC surged. This means that the market absorbs the selling pressure, which in turn increases the price. This is considered a bullish sign and could mean that a bottom has been reached or is very close.

The source: glass node

Actual Profit

A similar picture emerges when looking at the real interest rate (RP), which has fallen since the all-time high in November 2021.

On January 22, real interest rates bottomed out (red circle) at $290 million.

With the exception of July 21 (black circle), when actual rates fell to $220 million, this is the lowest since November 2020.

The source: glass node

Actual Net Profit/Loss

Finally, consider the actual net profit/loss ratio combining the previous two metrics. It hit its bottom (red circle) on January 22 at $592 million. Since then it has been on the rise and is now almost positive.

Before that, the indicator bottomed in March 2020 (black circle) and June 2021 (blue circle). Both marked all-time lows and the indicator reversed trend almost immediately thereafter.

Therefore, a continuation of this indicator’s rise would go a long way in confirming that BTC has bottomed.

The source: glass node

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page