Bitcoin’s realized profit-and-loss (P&L) ratio has fallen to its lowest level in 43 months, a development that has historically coincided with major market bottoms, according to blockchain analytics platform CryptoQuant.

The realized P&L ratio dropped to -0.35, marking its lowest reading since December 2022, when the collapse of FTXpushed Bitcoin below $16,000.

CryptoQuant said similar readings in 2015 and 2019 were followed by significant Bitcoin price rallies, suggesting the latest decline could indicate that the market is nearing a bottom.

The indicator measures the net percentage of Bitcoin held at a profit or loss relative to the total circulating supply, providing insight into overall investor sentiment and market conditions.

Despite a nearly 50% correction from its October peak of $126,080, Bitcoin has shown signs of recovery, gaining more than 7% after falling to around $58,190 on June 25.

Market analysts linked the recent sell-off to concerns surrounding Strategy after its perpetual preferred stock offering, Stretch (STRC), dropped well below its $100 par value, raising questions about the sustainability of its dividend model.

Meanwhile, Matt Hougan, Chief Investment Officer at Bitwise Asset Management, said the recent market shakeout has reduced excessive leverage and could bring Bitcoin closer to establishing a market bottom.

Hougan said he believes the market is nearing the end of its correction and expects a new bull market to emerge later this year.

Separately, Adam Livingston of Swan Bitcoin noted that Bitcoin is currently trading only 16% above its realized price, the network’s average on-chain cost basis. Historically, similar levels have been followed by average gains of 41% over six months and 81% over 12 months.

Livingston argued that although buying during periods of weak sentiment can be uncomfortable, waiting for the exact market bottom often causes investors to miss attractive buying opportunities.