On-chain data from CryptoQuant points to a familiar crypto cycle transition.
Supply held in profit and supply held at a loss have begun to move apart after converging near prior market bottoms.
Analyst Crypto Dan notes that this pattern has marked the end of every major downtrend so far.
The current divergence suggests the crypto market is nearly finished shifting into a fresh uptrend cycle.
What Do Profit and Loss Ratios Reveal About Market Cycles?
These ratios track the percentage of circulating Bitcoin sitting above or below its average acquisition cost.
When the two lines converge—often called a “kiss”—roughly half the supply sits underwater.
That moment has historically coincided with peak capitulation. Once the lines separate again, with profit supply rising and loss supply falling, the broader trend has typically flipped higher.
The same sequence is unfolding now.
How Does the Current Setup Differ from Past Bottoms?
Earlier cycle lows saw Bitcoin dip below its Realised Price, the average cost basis of all coins.
This time, the drawdown stayed comparatively shallow. Still, the profit-loss convergence occurred, and the subsequent separation has started.
In addition, the overall structure of the ratios continues to align with previous transitions from downtrend into uptrend.
The shallower price action simply means less extreme pain was required to clear the market.
Why Does the Divergence Matter for the Broader Crypto Market?
A sustained separation between the two ratios has previously supported multi-month advances.
It signals that fewer holders remain underwater and more coins sit in profitable hands, reducing forced selling pressure.
Meanwhile, new capital can enter with greater confidence once the worst of the loss overhang clears.
The current reading therefore offers a constructive backdrop even if short-term volatility persists.
Is the Crypto Uptrend Cycle Already Underway?
Crypto Dan describes the market as “in the process of turning” rather than fully confirmed.
The ratios have not yet completed a clean, sustained divergence, yet the direction of travel matches historical precedent.
Further confirmation would come from continued separation and supporting metrics such as rising accumulation or improving demand.
At the same time, the absence of a deep Realized Price breach leaves room for a more measured advance than prior explosive cycles.
What Next in This Transition?
Stakeholders (traders and investors) must monitor whether the profit ratio continues to climb while the loss ratio declines.
A clean break higher in the separation would strengthen the case for a durable uptrend.
Beyond that, cross-check with exchange flows, realised profit-taking, and broader liquidity conditions.
Historical patterns provide a useful map, yet each cycle carries unique features that can alter timing and magnitude.
The latest CryptoQuant reading shows profit and loss ratios diverging after their characteristic convergence.
That sequence has preceded every major uptrend in the data history examined so far, placing the market near the end of its transition phase.
