Bitcoin’s On-Chain Data Signal Bear Phase Ahead

The crypto market has continued to show mixed signals as the market has remained extremely weak for most of the year. 

Amid poor market conditions, Bitcoin’s on-chain metrics are beginning to flash warning signals as its crucial indicator suggests the asset is approaching a bear season.

On Monday, Feb. 16, crypto analytics platform CryptoQuant shared on-chain data revealing that a key profitability metric has fallen back to historic levels, which marked the beginning of major bear seasons.

Bitcoin’s aSOPR retests 0.92

Per the data, Bitcoin’s Adjusted Spent Output Profit Ratio (aSOPR) has declined massively to the 0.92-0.94 range. Notably, this level has previously marked major corrective phases in past market cycles.

It is important to note that aSOPR metric is used to measure whether coins moved on the Bitcoin network are being sold at a profit or loss. 

This is also evident in the steady institutional withdrawals seen among Bitcoin ETFs, as the majority of the funds have continued to register steady outflows.

Thus, a reading below 1.0, as currently seen in the provided data, suggests that investors are, on average, spending coins at a loss. 

Nonetheless, the analyst further emphasized that similar levels were reached in 2019 and 2023, and they both coincided with periods of heavy selling pressure and market capitulation, when participants exited positions amid weakening sentiment.

Is Bitcoin’s recovery still possible?

The analyst further provided charts revealing that the current crypto market structure is similar to those earlier transition phases. 

Multiple cycle lows on prior markets formed near the 0.92-0.93 zone, suggesting that the metric is once again approaching major historically bear territory. 

Unlike midcycle pullbacks, where aSOPR typically rebounds above 1.0 quickly, the present move reflects sustained weakness and continued loss realization.

While the broad market momentum remains weak, market analysts predict that Bitcoin may not recover from its downturn if aSOPR fails to reclaim the 1.0 level in the near term.

As such, the probability increases that the market is shifting from a temporary correction period into a broader bearish phase.