Bitcoin’s on-chain profitability has recovered sharply from its March lows, but analyst Axel Adler Jr. says the market still lacks a stronger behavioral confirmation that a durable reversal is underway.
In his May 19 “Bitcoin Morning Brief,” Adler pointed to a mixed setup across two closely watched on-chain indicators: Bitcoin Percent Supply in Profit and Short-Term Holder SOPR. The first metric shows a meaningful structural recovery. The second still suggests that recent buyers are not yet realizing sustained profits with enough confidence to validate the move.
“Supply in Profit has recovered after the capitulation phase, but short-term holders are still not realizing sustained profits,” Adler wrote. “There is still no behavioral confirmation of a reversal.”
Bitcoin Nears Critical Zone as Short-Term Holders Flash Warning
According to Adler’s data, Bitcoin Percent Supply in Profit on a seven-day simple moving average has climbed from a March low of 53.6% to 63.3% as of May 18. The recovery indicates that a larger share of circulating Bitcoin now has an on-chain cost basis below the current market price, marking a clear improvement from the capitulation phase earlier this year.
The move, however, remains incomplete by the analyst’s framework. Adler noted that the current reading is still roughly 10 percentage points below January levels, when the metric stood above 72%, and remains beneath the historical cumulative average of around 76.9%. In his view, that keeps Bitcoin in a recovery phase rather than a fully normalized profitability regime.
“The current level remains below the historical cumulative average of around 76.9%,” Adler wrote. “This means the market is still in a recovery phase. A return above 70% while the current price dynamics hold would be the first signal of normalization in the supply structure.”
The more fragile signal comes from short-term holders. Adler said Bitcoin’s STH-SOPR SMA-7D recovered from a capitulation zone below 0.97 earlier this year but has failed to hold decisively above the neutral 1.0 threshold. As of May 18, the indicator stood at 0.9994, slightly below neutral, with Bitcoin near $76,900.
That matters because STH-SOPR tracks whether coins moved by short-term holders, typically defined as coins held for less than 155 days, are being sold at a profit or loss. A reading below 1.0 indicates that these market participants are selling at a loss on average. For Adler, that makes the recent slip below the threshold more important than the headline improvement in aggregate supply profitability.
“STH-SOPR SMA-7D reached the cycle low in early February 2026 at 0.967,” Adler wrote. “This was a zone of clear capitulation, when short-term holders were broadly realizing losses. The following recovery was gradual.”
The indicator had stabilized in the 1.001 to 1.009 range in April as Bitcoin moved above the $75,000 to $80,000 area. But the pullback to 0.9994 marked the first move back below 1.0 after roughly two weeks above the threshold, according to the brief. Adler framed that as a warning that the recovery still depends heavily on price holding a narrow support band.
“The key question now is whether STH-SOPR can hold above 1.0 again or continue declining together with price,” he wrote. “Losing the 1.0 level with price below $76k would increase the risk of retesting the March lows in Supply in Profit.”
For now, Adler described the market stance as neutral with a cautious bias. The critical zone is $76,000 to $77,000, which he said is sufficient to push STH-SOPR back above 1.0 if buyers defend it. A stronger confirmation would require STH-SOPR to remain above 1.0 for five to seven trading days while Bitcoin holds above $78,000 to $80,000, alongside Supply in Profit moving toward the 68% to 70% range.
The downside scenario is more immediate. Adler flagged a potential pullback to $73,000 to $74,000 as the main risk, saying that move could drag STH-SOPR back into the 0.98 to 0.99 zone and stall the improvement in Supply in Profit.
At press time, BTC traded at $77,015.
Featured image created with DALL.E, chart from TradingView.com
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