Emre Yumlu 
As volatility continues to shape the crypto markets, Bitcoin (BTC) investors have received a cautionary signal. Joao Wedson, CEO of analytics firm Alphractal, has pointed to three key indicators suggesting that Bitcoin’s current cycle may be running out of steam, raising the risk of further downside.
Post-Fed Rally Fades Into Selling Pressure on Bitcoin
Last week, Bitcoin surged past $117,000 after the U.S. Federal Reserve announced a rate cut. However, renewed selling pressure quickly emerged, dragging the leading cryptocurrency down to around $112,000 at the start of this week.
Adding to investor unease, history shows that September has often been a weak month for crypto markets, with past cycles delivering sharper corrections during this period.
1. SOPR Signal: Profitability on the Decline
Wedson highlighted the Spent Output Profit Ratio (SOPR) as the first red flag. This on-chain metric measures whether transactions are being executed at a profit or a loss:
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Above 1: sellers are in profit
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Below 1: sellers are at a loss
Currently, SOPR remains above 1, yet its downward trend indicates weakening profitability on the blockchain.
“The SOPR signal is an excellent tool to detect when profitability is starting to fade. Never before in Bitcoin’s history have investors accumulated this late in the cycle and at such elevated price levels,” Wedson explained.
2. Short-Term Holder Risk Zone for Bitcoin
The second indicator Wedson flagged is the realized price for short-term holders (STH), which now stands near $111,400.
Should Bitcoin dip below this threshold, it could trigger stop-loss liquidations from short-term investors, potentially accelerating a sell-off.
3. Sharpe Ratio Weakens Despite Higher Prices
Finally, Wedson pointed to the Sharpe ratio, which measures risk-adjusted returns. Despite Bitcoin’s higher price levels compared to previous cycles, the ratio has declined.
This suggests that the reward for risk taken is diminishing, limiting Bitcoin’s overall profit potential in the current environment.
Could Altcoins Steal the Spotlight?
While these three indicators paint a bearish picture for Bitcoin, Wedson emphasized that market enthusiasm might not vanish altogether. Instead, he argued that a renewed wave of investor interest could shift toward altcoins, rather than being driven by Bitcoin itself.
*This content is not an investment idea.
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