The wild ride of bitcoin’s price action over the past week has left many investors wondering if the top is in for BTC’s impressive 2025 run. After soaring to new highs above $120,000, a sharp correction saw bitcoin plummet nearly 10% to the low $90,000s. However, a closer look at some key onchain indicators suggests that rather than signaling the end of the bull market, the current price levels may actually present a prime buying opportunity before the next major leg up.
Bitcoin SOPR Hints at Capitulation Point
One of the most revealing metrics painting a bullish picture for BTC is the Spent Output Profit Ratio, or SOPR. This indicator compares the value of bitcoins when they were last moved to the value when they are spent again, giving insight into overall market profitability. Currently, the short-term SOPR (which focuses on coins moved in the last 155 days) has crept up to 0.987.
Historically, when SOPR drops below 1, it often indicates a local bottom as investors are selling at a loss – a phenomenon known as capitulation. In previous market cycles, these have proven to be some of the most opportune times to accumulate bitcoin before a new surge to higher prices. The fact that short-term SOPR is once again approaching this key level suggests the market may be in oversold territory and due for a reversal.
“As short-term investors experience more pain, it often presents better opportunities for accumulation,” notes cryptocurrency analyst Mac_D. “If there is further decline from the current price, smart investors will likely accumulate the coins sold cheaply by short-term investors.”
MVRV and Puell Multiple Support Bullish Outlook
The SOPR isn’t the only indicator flashing a “buy” signal either. Both the Market Value to Realized Value (MVRV) and Puell Multiple also remain at levels typical of a continuing bull trend rather than a major top:
- MVRV compares the total market cap to the “realized cap” which values each bitcoin at its last moved price. It helps determine if BTC is overvalued or undervalued relative to “fair value.”
- Puell Multiple looks at miner revenues compared to historical norms. High values suggest miner profitability is unsustainably high and due to correct to the downside.
Currently, neither of these indicators are showing the excessively stretched readings that typically coincide with bitcoin market cycle peaks. This adds further credence to the notion that BTC still has room to run before putting in a more prolonged top.
Short-Term Shakeout Before the Next Breakout?
While the onchain data presents a compelling case for the bull market continuing, that doesn’t mean bitcoin won’t face volatility and shakeouts in the near-term. In fact, another dip to flush out late buyers may be just what’s needed to propel BTC to new highs.
Profit-taking from the recent rally combined with concerns about inflation and interest rates could certainly spark another leg down. However, the short-term holder ratio of 60% indicates there is still plenty of “dumb money” that could capitulate if prices slide further.
This would likely be followed by a period of consolidation as strong hands accumulate discounted BTC from weak hands – effectively transferring bitcoins to those with higher conviction. This is a pattern that has played out many times before, with the “smart money” quietly buying the dip before the next major price breakout.
“Selling coins at this juncture might prove to be a very unwise decision,” cautions Mac_D. “If there is further decline from the current price, smart investors will likely accumulate the coins sold cheaply by short-term investors.”
Economic Uncertainties Remain a Risk Factor
So while bitcoin’s underlying fundamentals and onchain data look extremely healthy, there are still some risks to be aware of. Chief among these is the precarious state of the global economy and rising inflation forcing central banks to raise interest rates.
Higher rates tend to create headwinds for risk assets like bitcoin as money flows into safer yield-generating instruments like bonds. Recently, economic data has come in hotter than expected, with a key gauge from the Institute for Supply Management (ISM) showing prices paid reaching the highest level since early 2023.
Traders are now eyeing the release of the latest U.S. jobs report which could provide more ammo for the Fed to remains hawkish on rates if payroll growth overperforms. A strong number that adds to wage and inflationary pressures would likely spark a further correction in BTC and equities.
Onchain Metrics Point to Looming Opportunity
Even with the macro risks, the balance of onchain data still points to the potential for substantial upside in bitcoin. The fact that long-term holders continue to accumulate while short-term speculators increasingly sell at a loss is historically one of the most positive setups for future price appreciation.
Of course, trying to perfectly time major bottoms is extremely difficult. But by keeping an eye on key metrics like SOPR dipping into capitulation territory, the MVRV remaining at reasonable rather than overextended levels, and the continuing transfer of coins from weak to strong hands, investors can gain high-probability insight into bitcoin’s market cycle to inform their decisions.
For those with a multi-year investment horizon, the risk/reward of buying BTC in the low $90,000s appears extremely attractive. A revisit to these prices, however briefly, may prove to be the last great entry point before the bulls regain control and the king of cryptocurrencies powers on to new all-time highs.
Even with the macro risks, the balance of onchain data still points to the potential for substantial upside in bitcoin. The fact that long-term holders continue to accumulate while short-term speculators increasingly sell at a loss is historically one of the most positive setups for future price appreciation.
Of course, trying to perfectly time major bottoms is extremely difficult. But by keeping an eye on key metrics like SOPR dipping into capitulation territory, the MVRV remaining at reasonable rather than overextended levels, and the continuing transfer of coins from weak to strong hands, investors can gain high-probability insight into bitcoin’s market cycle to inform their decisions.
For those with a multi-year investment horizon, the risk/reward of buying BTC in the low $90,000s appears extremely attractive. A revisit to these prices, however briefly, may prove to be the last great entry point before the bulls regain control and the king of cryptocurrencies powers on to new all-time highs.
