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:

• Above 1: sellers are in profit

• 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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Bitcoin Cycle Indicators Reach Distribution Zone

A study published by the on-chain analytics platform CryptoQuant highlights that the Bitcoin Cycle Indicators Index (IBCI) has reached the distribution zone for the first time in eight months. This could indicate that the Bitcoin bull market might be coming to an end.

The IBCI is a combination of seven popular indicators used to understand Bitcoin’s price cycles. These indicators include:

• Puell Multiple: Tracks mining revenue for Bitcoin.
• Spent Output Profit Ratio (SOPR): Shows realized profits and losses.
• Net Unrealized Profit/Loss (NUPL): Measures overall market sentiment.

Gaah, a CryptoQuant contributor, notes that not all these indicators have fully reached the historical distribution zone. However, their convergence suggests that the market may be nearing a peak.

Bitcoin Price Targets and Risks

The analysis shows that Bitcoin briefly entered the risk zone for peaks at the start of 2024, but this did not result in a bear market. In the long term, prices could potentially drop to the $90,000 range. However, in the short term, a new peak of $137,000 might still be on the table.

What Do Puell Multiple and Cycle Indicators Suggest?

The Puell Multiple remains below the critical threshold of “6,” indicating that the market hasn’t yet experienced a full peak. However, if the IBCI indicators reach 100%, a correction or a bear market may follow.

2025 Bitcoin Predictions: Could It Reach $1.5 Million?

Network economist Timothy Peterson suggests that Bitcoin could make a significant leap in the long run. According to him, BTC might hit $1.5 million by 2035. However, he also warns of potential price volatility along the way.

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