In a notable recovery, Bitcoin’s on-chain profitability has surged from its March lows, with the latest figures indicating that 63% of Bitcoin’s supply is now in profit. However, analysts remain cautious, suggesting that the market still lacks definitive behavioral signals to confirm a sustained reversal.
Axel Adler Jr., in his May 19 “Bitcoin Morning Brief,” pointed out a mixed sentiment reflected in two key on-chain metrics: the Bitcoin Percent Supply in Profit and the Short-Term Holder SOPR. While the former has shown a significant recovery, the latter indicates that recent buyers are hesitant to realize sustained profits, raising doubts about the durability of the current market phase.
“Supply in Profit has recovered after the capitulation phase, but short-term holders are still not realizing sustained profits,” Adler noted. “There is still no behavioral confirmation of a reversal.”
Market Indicators Raise Flags
According to Adler’s analysis, the Bitcoin Percent Supply in Profit, measured by a seven-day simple moving average, has climbed from a March low of 53.6% to 63.3% as of May 18. This recovery signifies that a larger portion of circulating Bitcoin now has an on-chain cost basis that is below the current market price, a marked improvement from the earlier capitulation phase.
However, Adler warns that the current recovery is not complete. He highlighted that this figure is still about 10 percentage points lower than January levels, when the metric exceeded 72%, and remains below the historical cumulative average of approximately 76.9%. This suggests that Bitcoin is still in a recovery phase rather than having transitioned to a fully normalized profitability regime.
“The current level remains below the historical cumulative average of around 76.9%,” he explained. “A return above 70% while the price dynamics hold would be the first signal of normalization in the supply structure.”
On the other hand, the STH-SOPR, which tracks the profitability of coins moved by short-term holders (defined as those held for less than 155 days), has shown a less optimistic trend. After dropping into a capitulation zone below 0.97 earlier this year, the STH-SOPR has struggled to maintain a position above the neutral threshold of 1.0. As of May 18, it stood at 0.9994, slightly below neutral, with Bitcoin trading around $76,900.
This metric is crucial because it reflects whether short-term holders are selling their coins at a profit or a loss. A reading below 1.0 indicates that, on average, these market participants are selling at a loss. Adler emphasizes that the recent slip below this threshold is more significant than the overall improvement in supply profitability.
“STH-SOPR SMA-7D reached the cycle low in early February 2026 at 0.967, marking a clear capitulation phase,” he noted. “The subsequent recovery was gradual.”
In April, the STH-SOPR stabilized between 1.001 and 1.009 as Bitcoin fluctuated between $75,000 and $80,000. However, the recent pullback to 0.9994 is concerning, as it marks the first descent below 1.0 after a brief period above this threshold. Adler views this as a warning that the recovery is still heavily reliant on maintaining price support.
“The key question now is whether STH-SOPR can hold above 1.0 again or continue declining alongside price,” he stated. “Losing the 1.0 level with price below $76k would increase the risk of retesting the March lows in the Supply in Profit.”
Currently, Adler describes the market stance as neutral with a cautious bias. The critical zone for Bitcoin lies between $76,000 and $77,000, which could potentially push the STH-SOPR back above 1.0 if buyers defend it. A stronger confirmation would necessitate the STH-SOPR remaining above 1.0 for five to seven trading days while Bitcoin holds above the $78,000 to $80,000 range, with Supply in Profit moving toward 68% to 70%.
Conversely, Adler warns of a potential pullback to the $73,000 to $74,000 range, which could drag the STH-SOPR back into the 0.98 to 0.99 zone and stall the progress in Supply in Profit.
As of the latest updates, Bitcoin is trading at $77,015.
