Bitcoin is struggling because short-term profitability metrics like the Spent Output Profit Ratio (SOPR) show rising sell pressure and losses, while a falling Sharpe Ratio signals weaker risk-adjusted returns; investors are rotating capital into altcoins, pushing altcoin dominance near 61%.
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Short-term profitability is falling, prompting sell-offs.
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Risk-adjusted returns (Sharpe Ratio) have declined versus 2024, reducing BTC’s appeal.
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Altcoin dominance is near 61%, indicating capital rotation and potential faster recovery for select altcoins.
Bitcoin price: SOPR shows increased sell pressure and a weaker Sharpe Ratio—investors rotate to altcoins. Read concise analysis and strategy guidance now.
Why is Bitcoin struggling now?
Bitcoin price is facing pressure because short-term holders are selling as profitability contracts and the Sharpe Ratio shows lower risk-adjusted returns. These signals, combined with reduced social interest, have driven capital into altcoins, increasing altcoin dominance and weighing on BTC momentum.
How does SOPR affect Bitcoin price?
The Spent Output Profit Ratio (SOPR) measures whether coins moved on-chain are being sold at profit or loss. A falling SOPR indicates more coins are sold at a loss, which increases supply-side pressure. Alphractal’s SOPR trend has recently flagged bearish momentum as late accumulators reduce exposure.
Profitability pushes investors away
Short-term profitability has been a major drag on BTC this week. SOPR reads suggest that many recent buyers are realizing losses, increasing sell pressure and encouraging risk reallocation.
Late-stage accumulation following Bitcoin’s multi-month rally left some participants exposed as the price retraced. As SOPR trends lower, short-term holders historically accelerate exits to lock remaining gains or cut losses.
Source: Alphractal
This SOPR level approximates the average entry price for short-term holders (coins held ≤155 days). If market price nears or drops below that band, selling activity can intensify as traders secure remaining profits.
Crypto analyst Joao Wedson has advised buyers at current levels to “reconsider their strategy,” emphasizing caution amid compressed profitability.
More indicators flag a bearish market
Sharpe Ratio analysis shows risk-adjusted returns for Bitcoin have fallen in 2025 and are now below 2024 levels. That decline means volatility is delivering less reward, making BTC less attractive for some investors.
When the Sharpe Ratio weakens, capital often flows toward assets with more favorable risk/reward profiles—frequently select altcoins or yield-bearing instruments.
Source: Alphractal
Social metrics for Bitcoin have also eased. Lower social interest historically correlates with reduced retail inflows and can exacerbate downtrends when combined with on-chain selling.
Wedson suggested that market makers are reallocating reserves: “Partially selling their BTC and taking their stablecoin reserves to invest more in altcoins after a long accumulation period.”
Altcoin interest continues to grow
Altcoin dominance has climbed toward 61%, based on CoinMarketCap index readings. While not yet at classic altseason thresholds (commonly >75), this level signals meaningful capital rotation into altcoins.
Rotation to altcoins can accelerate short-term recoveries in select projects, particularly those with strong fundamentals or recent protocol upgrades.
Source: CoinMarketCap
At the time of writing the index sits near 61, suggesting that altcoins have attracted meaningful inflows and could outperform in the near term if rotation continues.
Frequently Asked Questions
Is Bitcoin’s drop driven only by SOPR readings?
SOPR is a strong on-chain indicator, but the decline reflects multiple signals: falling SOPR, a weakened Sharpe Ratio, lower social interest, and ongoing capital rotation into altcoins. Combine indicators for a full view.
Should traders switch to altcoins now?
Rotation into altcoins can offer higher short-term returns but brings greater project-specific risk. Traders should assess fundamentals, liquidity, and risk tolerance before reallocating positions.
Key Takeaways
- SOPR signals: Short-term holders are realizing losses, increasing sell pressure.
- Sharpe Ratio: Lower risk-adjusted returns reduce BTC’s attractiveness for risk-seeking capital.
- Altcoin rotation: Dominance at ~61% indicates capital is moving into altcoins; selective opportunities may emerge.
Conclusion
This analysis shows Bitcoin’s recent weakness is driven by deteriorating short-term profitability and declining risk-adjusted returns, which are prompting a rotation into altcoins. Monitor SOPR, the Sharpe Ratio, and altcoin dominance for signs of a trend reversal. For active traders, reassess position sizing and focus on projects with robust fundamentals.
