Bitcoin's SOPR Signal Flashes Red: On-Chain Weakness Amid Price Recovery Attempt

Bitcoin traders are watching a critical metric closely as short-term holders face mounting pressure. The STH SOPR indicator—measuring the profit/loss ratio of recent market entrants—has dipped below 1.0, a level that typically signals emotional capitulation and forced selling. This breakdown reflects widespread underwater positions, particularly among those who accumulated near recent peaks.

On-Chain Data Reveals Cracks Despite Rally

Recent on-chain analytics paint a sobering picture. Profit and loss distribution data shows a majority of BTC holders are underwater, with the 7-day average STH SOPR hovering around 0.99—a hairline away from deeper despair. This metric serves as an early warning system: when short-term holders collectively abandon positions at losses, it often precedes either capitulation bottoms or extended downtrends.

Bitcoin has retreated approximately 30% from its all-time high of $126.08K, validating the severity of the correction cycle. While BTC recently recovered to around $92.75K—a modest bounce from lower levels—the technical picture remains challenged.

The Weekly Chart Tells a Harsh Story

The weekly timeframe exposes the underlying weakness. Bitcoin is struggling to maintain position above the critical 200-week moving average, a long-term support threshold that typically separates bull markets from bear phases. More troubling: the 50-week moving average remains tilted downward, confirming that intermediate momentum has deteriorated significantly.

This configuration suggests the market has shifted from accumulation into distribution—a phase where rallies attract sellers rather than fresh buying interest. Until BTC can reclaim these moving averages with conviction, the technical outlook remains bearish.

What Comes Next

The convergence of deteriorating SOPR readings, weakening weekly technicals, and the 30% drawdown from ATH paints a coherent narrative: we’re likely in an extended adjustment phase rather than a temporary pullback. Short-term traders should monitor whether this weakness extends or if stronger support zones emerge.