Bit_Guru
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Decoding BTC: The Chart That Could Predict the Next Rally
Capital Flows Slow
Following the formation of a $124.4K high last week, Bitcoin's upward momentum has stalled, with price retracing to a low of $112.9K, a near -9.2% pullback. This decline has been accompanied by noticeably weaker capital inflows over recent weeks, suggesting that investors were unwilling to inject fresh capital at those elevated price levels.
When we compare the current rate of capital inflows to the previous ATH breakouts, the realized cap has increased by a substantially smaller percentage than it did during the March and December ATHs in 2024. The initial $100k breakout in late-2024 saw the realized cap rate of increase hitting +13% per month, whilst the current environment peaked at a far more modest +6%/month.
This softer period of capital inflow highlights the notably lighter appetite of demand from investors at this stage.
Profit taking activity has also declined in recent weeks, which we can visualize using the Volatility-Adjusted Net Realized Profit/Loss metric. This tool measures realized profit and loss in BTC terms, which normalizes it relative to Bitcoin’s growing market cap across cycles. It is further refined by adjusting for 7-day realized volatility, to account for Bitcoin’s diminishing returns and slower growth rate as the asset matures.
Notably, we can observe three bursts of substantial profit taking around the $70K and $100K breakouts in 2024, as well as the last $122K ATH, hit in July this year. These events signalled a strong appetite for investors to lock in large volumes of profit, but also an equally strong impulse of demand to absorb that sold supply.
In contrast, this latest all-time high attempt has seen realized profit-taking volumes decline markedly. One interpretation of this dynamic, is that the market failed to sustain upwards momentum, even though the sell-side pressure coming from existing holders was softer.
As local market momentum reverses, and price continues trending lower, we turn our attention to realized loss events, to assess for any substantial negative changes in investor sentiment. Through this local downtrend, investor loss taking has accelerated, reaching a value of $112M/day.
However, this remains within the typical range seen during local corrections throughout the bull cycle, with many events such as the Aug-2024 yen-carry unwind, and the ‘Trump Tariff Tantrum’ in Mar-Apr-2025 leading to substantially higher capitulation volumes.
This suggests that the prevailing downturn has not put a meaningful dent in investor confidence just yet, although elevated losses would start working against that idea.
A Leverage Driven Decline
Whilst on-chain profit and loss-taking remained relatively muted during the recent ATH formation and the following correction, activity in the futures markets has accelerated. Open interest across Bitcoin futures contracts remains elevated at $67B, highlighting the high degree of leverage currently in play.
Notably, over -$2.3B in open interest was unwound during the recent sell-off, with only 23 trading days recording a larger nominal decline. This underscores the speculative nature of the market, where even moderate price movements can trigger a significant contraction in leveraged positions.
Diving deeper, we can evaluate the scale of combined long and short liquidations during both the ATH formation and the subsequent price contraction.
While liquidation volumes did rise during these events, with shorts reaching $74M across the ATH, and longs hitting $99M during the downtrend, these levels remain noticeably lower than those seen during similar volatile price moves this year. This suggests that a significant portion of recent contract closures were likely voluntary, and therefore risk-managed, rather than driven by forced liquidations as excessive leverage is flushed out.
When we evaluate futures open interest across the the major altcoins (ETH, SOL, XRP, DOGE), we note that the combined total has surged to a new all-time high of $60.2B over the weekend. This is nearing a parity of scale with open interest in Bitcoin contracts. However, this was short lived, and was followed by a -$2.6B decline as prices corrected lower, creating the 10th largest drop on record.
These rapid fluctuations underscore that altcoins are currently drawing a significant amount of investor attention, and have meaningfully contributed to heightened reflexivity and fragility across digital asset markets.
In addition, combined liquidations across the major altcoins have been quite elevated of late, reaching a peak of $303M/day, and experienced more than twice the liquidation volume compared to the Bitcoin futures market.
Furthermore, the scale of liquidations over the weekend now rank as the 15th largest on record, showcasing a heightened appetite for leveraged exposure to the altcoin landscape.
Speculation Intensifies
Over the years, Ethereum has generally been considered a bellweather asset, with periods of its out-performance usually correlated with broader a “altseason” phase in the digital asset market.
This relationship can also be observed through the lens of open interest dominance between Bitcoin and Ethereum, which reflects shifting risk appetite amongst market participants. As it stands today;
Bitcoin Open Interest Dominance: 56.7%Ethereum Open Interest Dominance: 43.3%
Ethereum’s share of open interest has been climbing rapidly of late, signaling a meaningful rotation of market attention further out on the risk curve. Notably, Ethereum’s open interest dominance has reached its 4th largest level on record, which underscores a meaningful rise in speculative activity. It is important to note, that being the second largest digital asset, Ethereum is one of the few that can take on institutional sized capital.
This trend becomes even more striking when viewed through the lens of trading volume. Ethereum’s perpetual futures volume dominance has surged to a new all-time high of 67%, being the strongest shift on record.
Such a pronounced rotation in trading activity reinforces the growing focus of investors on the altcoin sector, and points towards an acceleration of risk appetite within this market cycle.
At A Crossroads
When we examine Bitcoin’s performance from each cycle low, we can see that in both the 2015–2018 and 2018–2022 cycles, the all-time highs were reached roughly 2–3 months beyond where we are in the current cycle, by relative timing.
While these are the only two prior examples of a semi-mature cycle, and therefore do not provide a sufficient basis to assume this synchronicity will persist, this remains a noteworthy data-point. This perspective is particularly relevant when considered against the backdrop of the waves of on-chain profit-taking over the past two years, and the elevated levels of speculative activity visible in derivatives markets today.
To further support this observation, we can look at the duration in which the percentage of Bitcoin’s circulating supply has remained above the +1 standard deviation band in each cycle.
In the current cycle, this period has now extended to 273 days, making it the second-longest on record, surpassed only by the 2015–2018 cycle at 335 days. This suggests that, when measured from the perspective of a super-majority of supply being held in profit, the present cycle has delivered a comparable duration to prior cycles.
We can also measure the cumulative profit realized (in BTC terms) by long-term holders, from the point of reaching a new cycle all-time high, until the final peak of the cycle. From this perspective, we find that the LTH cohort, which are typically most active at cycle extremes, has already realized more profit than in all but one of the prior cycles, with the exception being 2016–2017.
This observation aligns with the earlier metric, adding another dimension through the lens of sell-side pressure. Taken together, these signals reinforce the view that the current cycle is firmly in its historically late phase.
However, each cycle carries its own idiosyncrasies, and there is no guarantee that market behavior will adhere to this fixed temporal pattern.
Nevertheless, these dynamics raise an interesting question. Does the traditional four-year cycle continue to hold, or are we witnessing its evolution? These are questions that will be answered over the months ahead.
Conclusion
Capital inflows into Bitcoin are showing signs of fatigue, with demand softening even as price set a new ATH at $124.4k. This slowing appetite has coincided with a surge in speculative positioning, as open interest across major altcoins briefly reached a record high of $60B before correcting with a -$2.5B decline.
Ethereum, long regarded as a bellwether for “altseason,” is once again at the forefront of this rotation. Its open interest dominance has climbed to its 4th largest level on record, while perpetual futures volume dominance has surged to a new ATH of 67%, marking the strongest structural shift to date.
From a cyclical perspective, Bitcoin’s price action also echoes prior patterns. In both the 2015–2018 and 2018–2022 cycles, ATHs occurred only 2–3 months beyond where we currently stand when measured from the cycle low. Alongside this, long-term holders have realized profit levels comparable to past euphoric phases, reinforcing the impression of a market late in its cycle.
Taken together, these signals highlight elevated leverage, profit-taking, and speculative intensity, hallmarks of historically mature market phases. However, each cycle carries its own idiosyncrasies, and there is no certainty that Bitcoin and the broader market will conform to a fixed temporal blueprint.
#BTCRally
Following the formation of a $124.4K high last week, Bitcoin's upward momentum has stalled, with price retracing to a low of $112.9K, a near -9.2% pullback. This decline has been accompanied by noticeably weaker capital inflows over recent weeks, suggesting that investors were unwilling to inject fresh capital at those elevated price levels.
When we compare the current rate of capital inflows to the previous ATH breakouts, the realized cap has increased by a substantially smaller percentage than it did during the March and December ATHs in 2024. The initial $100k breakout in late-2024 saw the realized cap rate of increase hitting +13% per month, whilst the current environment peaked at a far more modest +6%/month.
This softer period of capital inflow highlights the notably lighter appetite of demand from investors at this stage.
Profit taking activity has also declined in recent weeks, which we can visualize using the Volatility-Adjusted Net Realized Profit/Loss metric. This tool measures realized profit and loss in BTC terms, which normalizes it relative to Bitcoin’s growing market cap across cycles. It is further refined by adjusting for 7-day realized volatility, to account for Bitcoin’s diminishing returns and slower growth rate as the asset matures.
Notably, we can observe three bursts of substantial profit taking around the $70K and $100K breakouts in 2024, as well as the last $122K ATH, hit in July this year. These events signalled a strong appetite for investors to lock in large volumes of profit, but also an equally strong impulse of demand to absorb that sold supply.
In contrast, this latest all-time high attempt has seen realized profit-taking volumes decline markedly. One interpretation of this dynamic, is that the market failed to sustain upwards momentum, even though the sell-side pressure coming from existing holders was softer.
As local market momentum reverses, and price continues trending lower, we turn our attention to realized loss events, to assess for any substantial negative changes in investor sentiment. Through this local downtrend, investor loss taking has accelerated, reaching a value of $112M/day.
However, this remains within the typical range seen during local corrections throughout the bull cycle, with many events such as the Aug-2024 yen-carry unwind, and the ‘Trump Tariff Tantrum’ in Mar-Apr-2025 leading to substantially higher capitulation volumes.
This suggests that the prevailing downturn has not put a meaningful dent in investor confidence just yet, although elevated losses would start working against that idea.
A Leverage Driven Decline
Whilst on-chain profit and loss-taking remained relatively muted during the recent ATH formation and the following correction, activity in the futures markets has accelerated. Open interest across Bitcoin futures contracts remains elevated at $67B, highlighting the high degree of leverage currently in play.
Notably, over -$2.3B in open interest was unwound during the recent sell-off, with only 23 trading days recording a larger nominal decline. This underscores the speculative nature of the market, where even moderate price movements can trigger a significant contraction in leveraged positions.
Diving deeper, we can evaluate the scale of combined long and short liquidations during both the ATH formation and the subsequent price contraction.
While liquidation volumes did rise during these events, with shorts reaching $74M across the ATH, and longs hitting $99M during the downtrend, these levels remain noticeably lower than those seen during similar volatile price moves this year. This suggests that a significant portion of recent contract closures were likely voluntary, and therefore risk-managed, rather than driven by forced liquidations as excessive leverage is flushed out.
When we evaluate futures open interest across the the major altcoins (ETH, SOL, XRP, DOGE), we note that the combined total has surged to a new all-time high of $60.2B over the weekend. This is nearing a parity of scale with open interest in Bitcoin contracts. However, this was short lived, and was followed by a -$2.6B decline as prices corrected lower, creating the 10th largest drop on record.
These rapid fluctuations underscore that altcoins are currently drawing a significant amount of investor attention, and have meaningfully contributed to heightened reflexivity and fragility across digital asset markets.
In addition, combined liquidations across the major altcoins have been quite elevated of late, reaching a peak of $303M/day, and experienced more than twice the liquidation volume compared to the Bitcoin futures market.
Furthermore, the scale of liquidations over the weekend now rank as the 15th largest on record, showcasing a heightened appetite for leveraged exposure to the altcoin landscape.
Speculation Intensifies
Over the years, Ethereum has generally been considered a bellweather asset, with periods of its out-performance usually correlated with broader a “altseason” phase in the digital asset market.
This relationship can also be observed through the lens of open interest dominance between Bitcoin and Ethereum, which reflects shifting risk appetite amongst market participants. As it stands today;
Bitcoin Open Interest Dominance: 56.7%Ethereum Open Interest Dominance: 43.3%
Ethereum’s share of open interest has been climbing rapidly of late, signaling a meaningful rotation of market attention further out on the risk curve. Notably, Ethereum’s open interest dominance has reached its 4th largest level on record, which underscores a meaningful rise in speculative activity. It is important to note, that being the second largest digital asset, Ethereum is one of the few that can take on institutional sized capital.
This trend becomes even more striking when viewed through the lens of trading volume. Ethereum’s perpetual futures volume dominance has surged to a new all-time high of 67%, being the strongest shift on record.
Such a pronounced rotation in trading activity reinforces the growing focus of investors on the altcoin sector, and points towards an acceleration of risk appetite within this market cycle.
At A Crossroads
When we examine Bitcoin’s performance from each cycle low, we can see that in both the 2015–2018 and 2018–2022 cycles, the all-time highs were reached roughly 2–3 months beyond where we are in the current cycle, by relative timing.
While these are the only two prior examples of a semi-mature cycle, and therefore do not provide a sufficient basis to assume this synchronicity will persist, this remains a noteworthy data-point. This perspective is particularly relevant when considered against the backdrop of the waves of on-chain profit-taking over the past two years, and the elevated levels of speculative activity visible in derivatives markets today.
To further support this observation, we can look at the duration in which the percentage of Bitcoin’s circulating supply has remained above the +1 standard deviation band in each cycle.
In the current cycle, this period has now extended to 273 days, making it the second-longest on record, surpassed only by the 2015–2018 cycle at 335 days. This suggests that, when measured from the perspective of a super-majority of supply being held in profit, the present cycle has delivered a comparable duration to prior cycles.
We can also measure the cumulative profit realized (in BTC terms) by long-term holders, from the point of reaching a new cycle all-time high, until the final peak of the cycle. From this perspective, we find that the LTH cohort, which are typically most active at cycle extremes, has already realized more profit than in all but one of the prior cycles, with the exception being 2016–2017.
This observation aligns with the earlier metric, adding another dimension through the lens of sell-side pressure. Taken together, these signals reinforce the view that the current cycle is firmly in its historically late phase.
However, each cycle carries its own idiosyncrasies, and there is no guarantee that market behavior will adhere to this fixed temporal pattern.
Nevertheless, these dynamics raise an interesting question. Does the traditional four-year cycle continue to hold, or are we witnessing its evolution? These are questions that will be answered over the months ahead.
Conclusion
Capital inflows into Bitcoin are showing signs of fatigue, with demand softening even as price set a new ATH at $124.4k. This slowing appetite has coincided with a surge in speculative positioning, as open interest across major altcoins briefly reached a record high of $60B before correcting with a -$2.5B decline.
Ethereum, long regarded as a bellwether for “altseason,” is once again at the forefront of this rotation. Its open interest dominance has climbed to its 4th largest level on record, while perpetual futures volume dominance has surged to a new ATH of 67%, marking the strongest structural shift to date.
From a cyclical perspective, Bitcoin’s price action also echoes prior patterns. In both the 2015–2018 and 2018–2022 cycles, ATHs occurred only 2–3 months beyond where we currently stand when measured from the cycle low. Alongside this, long-term holders have realized profit levels comparable to past euphoric phases, reinforcing the impression of a market late in its cycle.
Taken together, these signals highlight elevated leverage, profit-taking, and speculative intensity, hallmarks of historically mature market phases. However, each cycle carries its own idiosyncrasies, and there is no certainty that Bitcoin and the broader market will conform to a fixed temporal blueprint.
#BTCRally
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
BTC
112,340.75
-1.78%
