On-chain data signals Bitcoin may be nearing a cycle bottom as short term investors return to profit

Bitcoin’s recent decline, which has pushed the price toward the $65,000 zone, is drawing renewed attention to signals that the market could be approaching a cycle bottom. Market watchers are focusing closely on the behavior of short-term investors and long-term technical averages to gauge the potential for a turnaround.

Technical and on-chain indicators highlight a possible bottom

Frank, a well-known Bitcoin quant analyst active on X and naming his account after economist Frank A. Fetter, argues that the steepest phase of the recent downtrend may already be behind us. According to Frank, the current market structure resembles previous major market bottoms, with several bottoming signals now appearing simultaneously.

A key metric in the discussion is Bitcoin’s 200-week simple moving average. Frank’s charts show that, together with various quantile ranges, the BTC/USD pair is once again entering a critical reversal area. This region has historically coincided with cycles of major market corrections and rebounds.

Mini glossary: A quantile is a statistical range that divides a data set into specific segments. Analysts use quantiles to identify price zones where historical turning points have occurred.

Particularly noteworthy is the ninth quantile—a region that previously marked crucial reversals during the 2022 bear market bottom and the sharp Covid-19 selloff in March 2020. Recent price movement suggests Bitcoin is once again approaching this historically significant zone.

Short-term investor profit-taking draws attention

Turning to short-term investor behavior, wallets that have held BTC for up to six months without selling can provide early clues to overall market shifts. The Short-Term Holder Spent Output Profit Ratio (STH SOPR), a key on-chain metric for this group, has recently turned positive again.

STH SOPR tracks whether short-term holders are moving coins at a profit or a loss. A move into positive territory indicates these investors are once again selling at a profit during minor recoveries—a pattern often associated with the early stages of bullish cycles.

Caution remains among some analysts

Despite these encouraging signals, not all market observers are equally optimistic. On-chain analytics platform CryptoQuant notes that a more definitive bottom may require the STH SOPR metric to fall even lower before a full recovery is in place.

Trader Germini, a CryptoQuant contributor, points out that previous local bottoms were marked by much deeper capitulation from short-term holders, with STH SOPR near the 0.93 area. Currently, the metric has not yet reached these deeper panic-sale regions.

There is a growing consensus in the market that Bitcoin could be entering the final stages of the current bear phase, potentially setting the stage for a new upside cycle. Nevertheless, some analysts advise waiting for a more pronounced flush of speculative traders before confirming a lasting bottom.

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