Bitcoin appears to be on the verge of a more significant correction, as the cumulative realized profits from long-term holders have reached levels comparable to those at previous market cycle peaks, according to on-chain analysis.
Long-term holders have realized profits totaling 3.4 million Bitcoin (BTC), while inflows into exchange-traded funds have decreased, as reported by Glassnode, indicating a sign of “exhaustion” following the Federal Reserve’s recent rate cuts.
Bitcoin has dropped below significant support levels near $112,000, reaching a four-week low of $108,700 during late Thursday trading on Coinbase, according to TradingView.
While it has not yet fallen to $107,500 as it did on September 1, analysts suggest it might be on that trajectory.
The rebound from that decline “quickly lost momentum, and with prices now near this level again, another wave of stop-loss selling might occur,” stated Markus Thielen, head of 10x Research, in a note shared with Cointelegraph.
“This situation arises when many are positioned for a Q4 rally — making a larger surprise a correction rather than a surge.”
Glassnode Predicts a Cooling Phase for Bitcoin
This week, Glassnode highlighted that the realized profit/loss ratio indicates that profit-taking has surpassed 90% of coins moved on three occasions this cycle, with the market having just distanced itself from the third extreme.
Historically, these peaks have coincided with major cycle tops, and “the probabilities lean towards a cooling phase ahead,” the report noted.
Some Bitcoin Holders Selling at a Loss
Thielen also noted that the Spent Output Profit Ratio (SOPR) is displaying troubling trends, with some Bitcoin holders starting to sell at a loss, which has historically indicated significant market stress.
In bull markets, a SOPR dip below 1 can signal seller exhaustion and may precede rebounds, whereas in bear markets, rejections at or above 1 typically indicate renewed downward pressure. The current ratio sits at 1.01, according to Glassnode.
Related: Bitcoin drops below $109K, but data indicates buyers are stepping in
More critically, the Short-Term Holder Net Unrealized Profit/Loss (NUPL) is nearing zero, posing a risk of liquidations as newer holders “rapidly cut their losses,” he mentioned.
What’s Next for Bitcoin?
Glassnode analysts concluded that unless institutional demand aligns once more with holders, “the risk of a deeper cooldown remains significant, suggesting a macro structure that increasingly resembles exhaustion.”
Meanwhile, Thielen stated that the firm remains neutral, “unless Bitcoin can regain the $115,000 mark.”
However, strategy chair Michael Saylor expressed a more optimistic view, stating earlier this week that Bitcoin is likely to rise in Q4 after macro headwinds dissipate.
The asset was priced at $109,645 at the time of writing, having declined 6.5% over the past week.
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