The financial and psychological situation of recent entrants is improving. Furthermore, the recent rise in BTC has not been accompanied by a significant increase in open interest: little leverage has been added to the derivatives markets in recent days.
BTC surges again
After several weeks of decline, the price of Bitcoin has managed to stay above the $110,000 threshold. While the short-term price action is a relief for recent entrants, the long-term momentum is starting to show signs of slowing down.
While it is too early to say that this bullish cycle is coming to an end, it is essential to study these dynamics to know what to expect in the coming weeks or months.
After the rain comes the sunshine!
In our previous analysis, we assumed that the market was in a context conducive to the formation of a local low.
This has now happened, with BTC rebounding from $107,000 to $115,000, returning to the range we had been tracking for several weeks, between $108,000 and $117,000.
During this recovery, the price of Bitcoin managed to climb above the average purchase price of short-term holders (STH), estimated at nearly $113,000.
The recovery of this key level is particularly constructive and indicates that the financial and psychological situation of the latest entrants is improving.
In the derivatives markets, the speculative purge that we documented in this analysis appears to be subsiding, with open interest in Bitcoin futures contracts stabilizing around 320,000 BTC.
Current values are the lowest recorded in the last 12 months, making the current market environment the healthiest we have seen in a long time in terms of speculative risk.
It should be noted that the recent rise in BTC has not been accompanied by a significant increase in open interest, suggesting that little leverage has been added to the markets in recent days.
However, we must not lose sight of short-term price action, which remains partly driven by liquidity in the derivatives markets.
The liquidity heatmap indicates that the price is now moving between two pockets of significant liquidity:
- short liquidity at the new ATH, between $124,000 and $126,000;
- long liquidity at the recent local low, between $103,000 and $106,000.
While it is currently impossible to predict with certainty which of these pockets will be crossed first, the current momentum seems to favor a short squeeze. To be continued!
Bitcoin’s cyclical dynamics
Beyond the short-term context, it is essential to monitor the long-term dynamics of BTC. Since 2023, the market’s stepwise expansion has caused the percentage of supply in profit to exceed the 95% threshold several times.
It is during these periods that the market sets new records, but also when the probability of a correction is highest.
Nevertheless, each of the corrections recorded in recent years has caused less and less severe drops in the percentage of supply in profit.
This shows that a growing share of the circulating supply remains profitable, bringing the market closer to a saturation point where almost all BTC would be held at a profit.
This context manifests itself during the advanced, even final, phases of bullish cycles, when the circulating supply reaches a point where its profitability is so high that even a minor correction can significantly affect this indicator.
While nothing of the sort is visible at the moment, caution will be needed in the coming weeks and months to identify a potential change in market structure.
The MVRV ratio, which measures the average degree of unrealized profit/loss among investors, is another essential metric to track in order to gauge the progress of the bull cycle.
While the price of BTC set several consecutive records between 2023 and 2025, this indicator recorded declining peaks. This signals a slowdown in the market’s unrealized profitability: although the price is rising, the average profit of investors is declining.
This divergence is typical of the final stages of bull cycles, where price increases are no longer able to generate sufficient gains to stimulate demand. Similarly, each correction pushes more and more investors underwater as their profitability struggles to improve.
Ultimately, the perceived value of the market (spot price) tends to converge toward its fundamental value (MVRV ratio), which mechanically leads to a structural shift toward a bearish dynamic in the medium term.
Although the market is managing to stay fairly high for the moment, it is important to note that the first signs of a slowdown are appearing.
Finally, the SOPR ratio, which measures the average profit-taking/loss behavior of investors, indicates whether or not the market is about to change structure.
Each bullish peak in the SOPR represents a wave of massive profit-taking, which puts considerable selling pressure on the market, slowing down the rises and often marking local peaks.
This is followed by corrections that bring the SOPR back close to its neutral zone (SOPR = 1), which represents the boundary between medium/long-term bullish and bearish trends for BTC.
To date, the SOPR has managed to remain above this threshold fairly robustly, underscoring the resilience of the bull cycle. While the weather is fine for now, caution will be needed when the SOPR dips below 1 for an extended period.
Summary of this on-chain analysis of Bitcoin
Ultimately, this week’s data indicates that the financial and psychological situation of recent entrants is improving.
The recent rise in BTC has not been accompanied by a significant increase in open interest, suggesting that little leverage has been added to the markets in recent days.
The MVRV ratio recorded declining peaks between 2023 and 2025, signaling a weakening of the market’s latent profitability: although the price is rising, the average profit for investors is falling.
Although the market is managing to stay fairly high for the moment, it is important to note that early signs of a slowdown are emerging.
