On-Chain Insights: The Asset Remains in a “Loss Realization” Phase, with Liquidity Poised for Potential Return

Advanced blockchain analytics reveal that the market is still deep in an “excess loss realization” stage—a period where participants close positions at a loss, often marking the later stages of bearish cycles. Key indicators, such as the 90-day realized profit/loss ratio, sit well below neutral levels, confirming ongoing capitulation among shorter-term holders. Short-term holder spent output profit ratio (a measure of whether recent buyers are profitable) hovers around 0.98–0.99, meaning most new entrants are underwater.
Roughly half the circulating supply sits in unrealized loss territory, echoing patterns seen in major past downturns (e.g., 2018 and 2022 cycles, where similar phases lasted 6+ months before reversal). The true market mean (a blended cost basis metric) sits significantly above current prices, creating a wide “defensive range” where price oscillates without clear direction. Liquidity return typically requires net realized profits to flip positive—a milestone not yet achieved.
Implications: This phase suppresses volatility in the short term but sets the stage for strong recoveries once exhausted sellers diminish. Historical parallels suggest opportunities for patient accumulators, especially when metrics like MVRV fall to depressed levels. However, without fresh catalysts (institutional demand or macro relief), downside risks persist toward realized price floors.
Watch closely: Any uptick in realized profits or holder behavior shifts could signal the end of this painful but necessary cleansing period.#GateSquareAIReviewer