Bitcoin Nears a Breaking Point as Profitability on the Network Drops

The combination of weakening profitability on-chain and a compressed chart structure suggests that a decisive move may be approaching.

Data from Alpharactal highlights a notable change in how Bitcoin is moving on-chain. According to the firm, transactions are no longer generating the kind of profits that typically define healthy bull phases. Their SOPR Trend Signal, a metric that tracks whether coins are being spent at a profit or a loss, has been steadily declining.

Historically, this indicator has been effective at identifying zones where the market transitions between optimism and stress. When SOPR trends lower, it implies that coins are increasingly being moved at slimmer margins or outright losses. Alpharactal notes that prolonged declines in this metric have often aligned with broader bear-market conditions rather than brief pullbacks.

Crucially, the data suggests that a durable price bottom tends to form only after the indicator resets and flashes stronger recovery signals. Based on current readings, that process could still take time, raising the risk that Bitcoin remains under pressure rather than staging an immediate rebound.

Cycles May Be More Intact Than Many Think

While some investors argue that Bitcoin’s historical cycles no longer apply, analyst Joao Wedson takes a different view. He points out that on-chain behavior continues to follow familiar fractal patterns seen in previous market cycles. According to Wedson, Bitcoin remains one of the most structurally predictable assets when viewed through long-term data rather than short-term narratives.

Wedson challenges the idea that Bitcoin must now move in lockstep with traditional markets. From a statistical standpoint, he argues, the blockchain data does not support that assumption. Instead, current conditions resemble earlier phases where sentiment weakened before a larger directional move emerged.

From this perspective, today’s uncertainty may be less about a broken model and more about patience as the cycle plays out.

Bitcoin Sits at a Technical Breaking Point

On the chart, trader Merlijn The Trader describes Bitcoin as being “on the edge.” Price action is currently wedged between a descending trendline and a major horizontal support zone, creating a setup that rarely lasts long.

He outlines three potential paths. The first is a clean breakout to the upside from the falling wedge. The second involves a brief retest of support followed by a breakout. The third, more aggressive scenario includes a sweep of lower liquidity near the $80,000 area before any sustained recovery.

Regardless of the path, Merlijn warns that the next move is unlikely to be subtle. As volatility compresses, the probability of a sharp expansion increases, especially once price escapes its current structure.

What the Signals Suggest

Taken together, the data paints a picture of tension rather than clarity. On-chain metrics show declining profitability, a condition that has historically aligned with extended cooling phases. At the same time, technical structure suggests that Bitcoin is nearing a point where indecision gives way to force.

Whether the market resolves higher or lower may depend on how quickly on-chain conditions stabilize and whether buyers are willing to defend key support levels.

As Bitcoin hovers at this crossroads, the question facing traders and investors alike is simple: is this compression the calm before a renewed advance, or the final pause before deeper downside?

The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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