Bitcoin may be facing a more substantial correction as realized profits from long-term holders have reached levels reminiscent of previous market cycle peaks, according to on-chain analysis.
Long-term holders realized profits of 3.4 million Bitcoin (BTC), while inflows into exchange-traded funds have slowed down, as noted by Glassnode, indicating “exhaustion” following the Federal Reserve’s recent rate cut.
Bitcoin has dropped below critical support levels around $112,000, reaching a four-week low of $108,700 on Coinbase during late Thursday trading, according to TradingView.
Although it has not yet fallen back to $107,500, as it did on September 1, analysts suggest that could happen soon.
The recovery from that dip “quickly lost momentum, and with prices now nearing this level again, another wave of stop-loss selling might occur,” stated 10x Research head Markus Thielen in a note shared with Cointelegraph.
“This comes at a time when many are positioned for a Q4 rally — which makes the larger surprise not a surge upward, but rather a correction.”
Glassnode predicts a cooling phase for Bitcoin
This week, Glassnode revealed that the realized profit/loss ratio indicates that profit-taking has surpassed 90% of coins moved three times this cycle, with the market just stepping away from the most recent peak.
Historically, these peaks have signified major cycle tops, and “probabilities suggest a cooling phase is imminent,” the report stated.
Some Bitcoin holders are facing losses
Thielen also highlighted concerning trends in the Spent Output Profit Ratio (SOPR), indicating that some Bitcoin holders are selling at a loss, a sign of significant market stress.
In bull markets, a SOPR below 1 can indicate seller exhaustion and often precedes rebounds, while in bear markets, rejections at or above 1 may signal renewed downward pressure. The current ratio is at 1.01, according to Glassnode.
Related: Bitcoin dips below $109K, but data indicates buyers are re-entering
More critically, the Short-Term Holder Net Unrealized Profit/Loss (NUPL) is nearing zero, which threatens to trigger liquidations as newer holders “quickly cut their losses,” he cautioned.
What’s next for Bitcoin?
Glassnode analysts concluded that unless demand from institutions and holders realigns, “the risk of a deeper correction remains significant, highlighting a macro structure that increasingly suggests exhaustion.”
In the meantime, Thielen stated the firm remains neutral, “unless Bitcoin can reclaim $115,000.”
Strategy chair Michael Saylor expressed a more optimistic outlook, claiming earlier this week that Bitcoin will rise in Q4 after macro challenges ease.
At the time of writing, the asset was trading at $109,645, having decreased by 6.5% over the past week.
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