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Bitcoin Holds $80K as On-Chain Indicators Signal Possible Correction

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BTC
$79,016.90-1.39%
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On-chain data shows Bitcoin’s adjusted SOPR has stayed above 1 for nine days in May, signaling profits for holders. On-chain analysis reveals a CSH Score above 40, pointing to overextended conditions that often precede BTC corrections. Exchange reserves are also rising, hinting at increased inflows to centralized platforms despite the price action.

The Bitcoin [BTC] adjusted SOPR has been above 1 for nine consecutive days in May, reported AMBCrypto. This metric measures if, on average, the coins being moved on-chain are in profit or at a loss. Scores above 1 indicate realized profits for holders.

Bitcoin continued to trade above the psychological $80k mark as stronger holders absorbed the selling from profit-taking activity. Eventually, this absorption can dry out, resulting in a price correction.

Historical trends warn of a steep BTC correction

In a post on X, Crypto Super Hub co-founder Jake Pahor warned that the CSH Score was above 40. This metric serves as a trend oscillator and is constrained to a score of 0 to 100. It uses an asset’s long-term growth trend to tell if it is in an accumulation zone (scores under 30) or overextended market conditions (scores above 60).

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Bitcoin Bear Rally
Source: Jake Pahor on X

The current reading of 41 is the third bear market rally in Bitcoin’s history to reach this zone. All three times, BTC witnessed a sharp correction.

The analyst stressed that three is a small sample size, but it was something to keep an eye on. If historical patterns repeat, investors and holders might be rewarded for taking profits and staying sidelined.

Though the spot taker CVD was buyer-dominated and the SOPR signaled holder profitability, the current rally was characterized more by decreased selling than active, sustained demand that rivaled previous bull market phases.

Treasuries and funds can publicly say they are buying, but…

Bitcoin Exchange Reserve (MoM)
Source: Joao Wedson on X

In a post on X, analyst and CEO of Alphractal Joao Wedson observed that the month-on-month exchange reserves exhibited a curious pattern. When the 30-day reserves move into positive zones, it signals more BTC entering centralized exchanges than leaving them in that window.

Though institutional holders continued to add to their BTC funds, the on-chain data showed a more bearish picture. The analyst wrote that “it would be very strange” if the price of the leading crypto continued to rise as reserves trended higher.

Final Summary

  • The Bitcoin holder profitability presented a risk to the ongoing price rally.
  • Rising exchange reserves and historical bear market rally patterns flashed warning signs for investors.
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