After briefly topping $117,000 on enthusiasm around the Fed’s latest rate cut, Bitcoin has stumbled back toward $112,000, reigniting concern that September’s reputation as a difficult month for crypto may hold true once again.
Analyst Joao Wedson, CEO of research firm Alphractal, pointed to three warning signs that suggest Bitcoin’s latest rally is losing steam. The first involves the Spent Output Profit Ratio (SOPR), a key on-chain gauge of whether coins are being sold at a profit or a loss.
While the SOPR still sits above the breakeven level of 1, Wedson noted that it has begun trending lower. That downshift implies that sellers are pocketing less from their transactions, signaling that profitability is shrinking even as prices remain high.
Pressure From Short-Term Holders
Wedson also highlighted the realized price for short-term holders, currently hovering near $111,400. With Bitcoin trading so close to this level, any slip beneath it could unleash a wave of stop-loss selling, further amplifying downside momentum.
Risk-Reward Looks Less Attractive
Finally, Wedson argued that the current cycle lacks the same risk-adjusted payoff that past bull runs offered. Despite Bitcoin’s higher headline price, the Sharpe ratio – a measure of return relative to risk – has weakened. That suggests investors face more volatility with less potential reward compared to earlier cycles.
Altcoins Waiting in the Wings
Taken together, these factors point to an exhausted cycle, according to Wedson. He added that market enthusiasm could soon pivot away from Bitcoin itself and into altcoins, where traders may see greater opportunities for fresh upside.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/bitcoin-price-3-bearish-signals-point-to-deeper-drop/