After marking a new all-time high of $111,791 last week, Bitcoin (BTC) is now resting at a critical juncture, with excessive speculation and high investor profits signaling a bearish reversal in a possible market correction.
In a recent post on X, a prominent on-chain analyst, Willy Woo, shared his “Bitcoin Short Term Models” indicator and highlighted a concerning trend. He noted that the current Spent Output Profit Ratio (SOPR) indicates investors sitting on substantial profits, with Bitcoin trading near the $112,000 mark.
The chart, shared by Woo, shows that Bitcoin has entered into overheated territory. While comparing it to past cycles, these ‘unrealized’ profit levels have led to sharp corrections. Historically, it has been seen that SOPR values above 1 during bull markets often precede pullbacks when market greed peaks.
Woo also pointed out that the capital inflow into the network has turned flat over the past three days, a stark contrast to the momentum seen during Bitcoin’s run from $75,000 to $112,000. This lull in buying activity raises concerns about the sustainability of the current rally.
“If we don’t get further highs soon, BTC will be setting up for bearish divergences on longer range charts at a time when capital inflows have been weaker than normal with speculation running too hot,” said Woo, adding, “If that happens we will need to wear out another wave of profit taking.”
While Woo expected a bearish trend, the market has held very well as of now, with Bitcoin trading near $108,800—down modestly 0.94% in the past 24 hours.
As of now, the broader market sentiment has remained bullish, and several analysts are expecting further highs in Bitcoin price. But the combination of high speculation and weak capital inflows has put Bitcoin on edge from a technical perspective.
Also read: US Bill for $1B Bitcoin Buy is Coming with Trump Support: Lummis
