- Bitcoin’s SOPR above 1 reflects profitability, but a downward trend shows decreasing profits for holders.
- The Miner Position Index reveals no significant Bitcoin sales, indicating miners are holding assets despite operational costs.
- Declining network fees and funding rates suggest a cooling phase, with potential for renewed bullish momentum.
The Bitcoin market remains in a bull phase despite recent price corrections following its surge past $108,000. Concerns about a prolonged correction similar to earlier phases have emerged. However, on-chain indicators provide tips into the current market conditions, pointing to a cooling-off period rather than the end of the bull cycle.
Adjusted SOPR Indicates Decreasing Profits
SOPR, calculated with a 7-day Simple Moving Average (SMA), shows current profit trends. The cryptoQuant chart shows that Bitcoin’s Adjusted SOPR (aSOPR) trended above 1, indicating profitability for holders. However, the downward trajectory of the 7-day SMA reflects decreasing profitability over time.
Source: CryptoQuant
Historically, when the aSOPR drops below 1, reversal trends occur due to loss-driven sell-offs. The current market phase aligns with cooling patterns seen during previous bull market corrections.
With the SOPR value above one but trending downward, market participants are realizing decreasing profits. Historically, a SOPR drop below 1 aligns with rebounds in Bitcoin prices. Selling at a loss often leads to reversals, a recurring pattern in bullish market phases.
BTC Miner Position Index Reflects Holding Patterns
The Miner Position Index (MPI), also analyzed with a 7-day SMA, tracks miner behavior in Bitcoin sales. Currently, the MPI is trending downward, showing no significant increase in Bitcoin transfers to exchanges.
This indicates that large mining firms continue holding Bitcoin as part of their reserves. However, periodic sales to cover operational expenses remain ongoing.
Network Fees, Funding Rates and Market Sentiment
Total network fees, viewed through a 7-day SMA, show reduced transaction activity, indicating a market cooling phase. Lower fees suggest subsiding market overheating as on-chain activity slows, consistent with periods of reduced volatility in previous cycles.
Funding rates have turned downward, with Bitcoin historically rebounding after extreme declines in funding rates. Negative funding rates have often triggered upward price movements during this cycle. Continued declines in funding rates could lead to renewed bullish momentum.
On-chain metrics confirm that the current market phase is a cooling-off period within an ongoing bull market. While short-term price movements remain volatile, historical trends point to possible rebounds.
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