Following a significant sell-off, Bitcoin is experiencing persisting bearish sentiment, with potential for extended downside, according to data from blockchain analytics firm Glassnode. The firm's analysis points to a Realized Profit/Loss Ratio (90-day SMA) dipping below the critical threshold of 1, a level which in the past has preceded prolonged periods of market contraction and sell-side dominance.
Historical data from Glassnode suggests that when Bitcoin's Realized P/L Ratio slides below one, the market often faces at least an additional five to six months of downtrend before a potential recovery. This ratio serves as an indicator of the overall market sentiment, and values below one imply that more investors are selling at a loss, which can exacerbate bearish market conditions.
Comparing past market behavior, Glassnode highlighted similar trends where Bitcoin saw continued price declines after the ratio fell. In 2022, a post-sub-1 occurrence led to a 25% price drop over six months, while in 2018 the aftermath saw over a 50% fall within five months. While past performance is not always indicative of future results, if these patterns were to hold, Bitcoin could be in for an extended period of price corrections. Investors are advised to monitor market developments closely and consider the impact of broader economic conditions on the cryptocurrency market.
