BTC Could Drop Below $44K as Traders Enter 'Excess Loss-Realization' Phase
Historical on-chain data shows BTC fell 25% in 2022 and 50% in 2018 following comparable loss signals, suggesting potential further downside ahead.
For the first time since 2022, Bitcoin (BTC) holders are offloading their positions at a loss, increasing the likelihood that the leading cryptocurrency's current price pullback could intensify over the next several weeks.
Key takeaways:
- Bitcoin is experiencing loss-driven selling behavior that has previously persisted for six months or longer.
- Such signals emerged during past bear market cycles, each time foreshadowing steep downward price movements.
BTC capitulation may last for another six months
The 90-day moving average of Bitcoin's realized profit/loss ratio fell beneath the 1 threshold on Monday.
This decline signaled that market participants were offloading their BTC positions at a loss, a behavior typically associated with panic-driven selling, liquidation pressures, or wider risk-averse market sentiment.
According to blockchain analytics platform Glassnode, historical patterns show that when this metric falls below 1, loss realization typically continues for a minimum of six months. Conversely, a recovery above the 1 level generally indicates diminishing selling pressure.
Market participants typically liquidate positions at a loss when they anticipate further downward price movement. Throughout previous bear market cycles, loss-taking activity has generally intensified during the middle phase of the cycle, which was subsequently followed by additional Bitcoin price declines.
For example, throughout the 2022 bear market cycle, BTC experienced a 25% decline within six months following the realized profit/loss ratio's drop below 1. Similarly, in 2018, the cryptocurrency plummeted by more than 50% over a five-month period under comparable market conditions, as illustrated below.
Should historical patterns repeat themselves, the BTC price could extend its downward trajectory for an additional five months or longer. This would validate "a full transition into an excess loss-realization regime," according to Glassnode's analysis.
Bitcoin price may bottom around $44,000
The increasing loss-realization activity in Bitcoin could consequently pull the BTC price down toward its "extreme low" valuation territories.
Such extreme lows are identified within the MVRV Pricing Bands indicator, which identifies zones where Bitcoin enters extreme unrealized profit or loss territories. Throughout history, the metric's lowest band (represented by the blue line) has aligned with Bitcoin's bear market price bottoms.
In February, the extreme low level was positioned around $43,760, representing a possible downside price target for August should BTC's price correction persist.
This price level also falls within the wider $40,000–$50,000 bottoming range that numerous market analysts have identified as a plausible target for late-2026.