Bitcoin’s on-chain profitability metric recovered to 63.3% as of May 18, but analyst Axel Adler Jr. warns the recovery lacks behavioral confirmation of a sustainable reversal. The Bitcoin Percent Supply in Profit measure, which tracks the percentage of circulating BTC trading above its on-chain cost basis, has climbed from a March low of 53.6%. Yet the weakness in short-term holder activity suggests the market foundation remains fragile despite headline gains.
Supply Recovery Incomplete After Capitulation
Bitcoin’s supply profitability has improved significantly from its March capitulation phase, when investors collectively realized losses at scale. The metric bottomed at 53.6% in March and has now recovered to 63.3% as measured by the 7-day simple moving average on May 18. However, this recovery sits well below the historical cumulative average of 76.9%, indicating the market is still in early recovery mode. Adler stated: “The current level remains below the historical cumulative average of around 76.9%. 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 gap between current and normalized levels suggests further price strength is required before supply distribution stabilizes.
Short-Term Holders Signal Caution Despite Price Support
The critical weakness lies in short-term holder behavior, measured by the STH-SOPR (Short-Term Holder Spent Output Profit Ratio). This metric tracks whether coins held less than 155 days are being sold at profit or loss. In early February 2026, STH-SOPR bottomed at 0.967, indicating widespread losses among holders with shorter time horizons. As of May 18, the metric sits at 0.9994, barely below the neutral 1.0 threshold. This persistent weakness contradicts the headline recovery in aggregate supply profitability. Adler emphasized: “Supply in Profit has recovered after the capitulation phase, but short-term holders are still not realizing sustained profits. There is still no behavioral confirmation of a reversal.” The divergence between the two metrics signals that while longer-term holders may be profitable, newer capital remains under water or barely profitable.
Price Dynamics Define Reversal Authenticity
The durability of Bitcoin’s recovery hinges on price action near critical levels. BTC traded at $77,015 at press time, within a critical support zone of $76,000-$77,000. Adler identified $78,000-$80,000 as the stronger confirmation zone where sustained profitability and short-term holder conviction would likely materialize. Conversely, a breakdown below $76,000 paired with STH-SOPR falling further would risk retesting March lows. “The key question now is whether STH-SOPR can hold above 1.0 again or continue declining together with price. Losing the 1.0 level with price below $76k would increase the risk of retesting the March lows in Supply in Profit,” Adler stated. The next 48 to 72 hours will likely determine whether this recovery has genuine market support or remains a technical bounce.
Normalization Still Distant Without Behavioral Shift
For Bitcoin to signal a genuine market reversal, two conditions must align: Supply in Profit must sustainably exceed 70%, and short-term holders must actively realize profits above the 1.0 STH-SOPR level. Currently, neither condition is firmly established. The recovery from March’s 53.6% low demonstrates resilience, yet the absence of short-term holder conviction suggests institutional and retail newcomers remain cautious. Full normalization toward the 76.9% historical average requires both price appreciation and behavioral confirmation from market participants actively trading profitably.
