Recent on-chain indicators are highlighting a significant bullish potential for Bitcoin (BTC). For the first time in three years, the complete elimination of short-term investors’ loss positions and the market’s ability to absorb profit-taking without notable price pressure have created a promising backdrop for the leading cryptocurrency.
Historic drop in short-term investor pressure
According to blockchain analytics, the loss pressure from short-term Bitcoin holders dropped to zero on May 8 and stayed there for five consecutive days. This metric measures unrealized losses among investors holding Bitcoin for less than 155 days. In late February, this figure peaked at 27.9%, and from late March through April, it hovered between 18% and 22%.
Bitcoin’s surge above $80,000 allowed all short-term investors to exit loss positions. At the same time, the proportion of Bitcoin held by this group fell to a three-month low. While these investors controlled about 28% of BTC supply at the start of March, this dropped to 22.2% by mid-May.
This reduction in both the number of short-term investors and overall loss exposure suggests that the likelihood of panic-driven selloffs in the market has decreased.
Market absorbs profit-taking pressure
Another key signal comes from the adjusted Spent Output Profit Ratio (aSOPR), which remained above 1.0 for nine consecutive days starting May 1. This indicates that investors have been consistently selling their coins at a profit, and the market has managed to absorb these sales without any significant drag on price. Experts point out that while a single day of profit realization is less meaningful, nine straight days signals sustained buying interest.
“The market being able to allow continuous profit-taking for nine days shows that buyers can withstand the selling wave and that the price has stayed strong,” stated one expert.
Even so, CryptoQuant’s latest report underscores that the $82,400 level, representing Bitcoin’s 200-day moving average, acts as a major resistance. The report also recalled that, historically, significant sell pressure began from this level in March 2022. In parallel, the premium for Bitcoin on the Coinbase exchange has turned negative, which analysts interpret as a sign that US institutional investors have yet to join the current upward trend.
A key cyclical indicator for Bitcoin, which tracks bull and bear market momentum, has also shown its first positive signal since early 2023, fueling optimism that a new phase may be underway for the broader market.
Altcoin movements remain uncertain
Conditions among altcoins are considered more volatile and less predictable than Bitcoin’s. On-chain analysts point out that 30-day average trading volumes for several altcoins have now surpassed their annual averages. Simultaneously, Bitcoin has dominated trading volumes since mid-April, a trend previously seen ahead of renewed momentum in the altcoin sector.
Meanwhile, research firm 10x Research notes that despite the recent climb in the 30-day moving average, altcoin trading volumes have begun declining in recent days. The firm warns that if the altcoin momentum falls below this level, it could serve as an alert for long-position holders. While Binance’s native token BNB has drawn attention following Grayscale’s ETF application and Coinbase’s inclusion of it on their roadmap, analysts stress that a definitive breakout in the wider altcoin market has yet to emerge.
“When trading volumes in some altcoins return to a downturn, this may serve as a cautionary signal for long-term positions,” cautioned 10x Research analysts.
