Market Loss Ratio Reaches Critical Threshold as 90-Day SMA Signals Deteriorating Liquidity

The 90-day SMA realized loss ratio currently stands near 1.5 and is on a consistent downward trajectory, steadily moving toward the critical level of 1. This persistent decline reflects a gradual softening in overall market liquidity conditions, with fewer profitable trades relative to underwater positions. Historical patterns indicate that once this loss ratio breaches below 1, the market typically experiences broad-based sell-offs and liquidations, where loss-making transactions become the dominant market force. Data from Glassnode reveals that monitoring this metric serves as an early warning signal for market stress periods, with a declining loss ratio often preceding significant market capitulation events.