Bitcoin’s (BTC) Late-Stage Rally Is a Trap for New Buyers as Expert Warns Cycle Exhaustion
Bitcoin’s latest plunge triggered heavy liquidations among recent long positions. Certain metrics now suggest buyers’ confidence is diminishing.
In fact, Alphractal founder and CEO Joao Wedson believes that Bitcoin appears to be flashing unmistakable signs of cycle exhaustion. He warned that this is what most market participants are failing to recognize.
Profitability Drying Up
In his latest analysis on X, Wedson flagged the SOPR Trend Signal, a reliable indicator of blockchain profitability, which now indicates that investor gains are drying up. He stressed that never before in Bitcoin’s history have investors accumulated BTC so late and at such elevated prices.
The Short-Term Holder (STH) Realized Price is currently hovering around $111,400, and serves as a critical benchmark for institutions that ideally should have built positions at much lower levels. To top that, Bitcoin’s Sharpe Ratio is notably weaker than in 2024, which depicts a deteriorating risk-to-return profile and limited profit potential. As such, these are some of the factors that may dampen institutional appetite despite the allure of new all-time highs.
Social interest, meanwhile, has fallen sharply, and the crypto analyst predicted that attention will only rebound because of altcoins rather than Bitcoin. According to him, market makers are already rotating capital by partially selling BTC and redirecting stablecoin reserves toward altcoins after a continued period of accumulation.
While Bitcoin may still climb to fresh records, Wedson argues that its profitability will remain lackluster compared to the compelling opportunities emerging across the altcoin market. He pointed out that early 2022 buyers are enjoying 600% gains, but those accumulating now face a dramatically different landscape.
Declaring 2025 an active Altcoin Season, Wedson urged investors to shift focus and emphasized that many altcoins currently boast far more attractive on-chain metrics and risk-reward profiles than Bitcoin.
Exchange Inflows Surge
During the September 7-15 rally, CryptoQuant found that outflows exceeded inflows, which supported the then-bullish momentum. Large BTC outflows, such as nearly 65K leaving exchanges at the end of August and early September, typically indicate accumulation in personal wallets and reduced immediate selling, which often coincides with price recoveries.
However, heightened selling activity was observed around September 17-19, as inflows spiked to nearly 40K BTC, which pushed BTC down from $117K to $112K. Following September 20, outflows weakened even further, meaning more coins remained on exchanges and selling pressure dominated.
Currently, inflows remain high while outflows are weak, which means that short-term downside risk persists. If outflows resume, accumulation could fuel a strong rebound from the current level; otherwise, further declines remain possible.
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