Bitcoin’s Recovery Rally Faces Critical Credibility Test as Profitability Rebounds
Onchain data shows 57.5% of Bitcoin supply in profit as of mid-July, but historical patterns suggest the rally may face headwinds before confirmation of a sustainable uptrend.
Profitability Returns to Historical Levels
Bitcoin investors have re-entered aggregate profit territory in July, marking a significant shift from the bear-market conditions that gripped the market earlier in the year. According to onchain analytics platform CryptoQuant, as reported by Cointelegraph, the share of Bitcoin holders in profit climbed to 57.5% as of July 22, a substantial rebound from 46.2% on June 30—the lowest point of 2026. This recovery is noteworthy because historically, when Bitcoin supply dips below 50% in profit, it typically signals the final capitulation phase that precedes the onset of new bull markets. While the current rebound has sparked optimism among bullish observers, seasoned onchain analysts caution that profitability recovery alone does not guarantee a sustained uptrend.
Long-Term Holders Remain Unconvinced Despite Improving Metrics
The improvement in Bitcoin supply profitability coincides with shifting behavior among long-term holders—entities whose Bitcoin has remained dormant for at least six months. These seasoned investors are beginning to move coins at higher prices, as reflected in an improving spent output profit ratio (SOPR), a metric that measures whether coins moving onchain are transacting at a profit relative to their acquisition cost. However, the crucial confirmation metrics for a sustained bull market have not yet aligned. According to CryptoQuant’s analysis, previous bear markets have only conclusively ended when two distinct conditions converge: Bitcoin supply in profit must exceed 64%, and the 30-day moving average of long-term holder SOPR must remain consistently above 1.0 without falling below that threshold for extended periods. Currently, only one condition is being met. The long-term holder SOPR’s 30-day moving average has remained below 1.0 for over 50 days, suggesting that even though prices have recovered, the largest and most experienced Bitcoin holders remain unconvinced about the durability of the rally. This divergence between price recovery and whale conviction represents a critical gap in the bull-market narrative.
A Previous Collapse Serves as a Warning
The current recovery echoes an earlier attempted rebound that ultimately collapsed, offering a sobering precedent. From April 28 through June 1, Bitcoin’s long-term holder SOPR held above 1.0 for 35 consecutive days while supply in profit climbed to 67%—not only meeting but exceeding the 64% historical threshold for bull-market confirmation. Yet both metrics subsequently “rolled back over,” failing to maintain the conditions necessary for sustained momentum. This failed attempt underscores why current gains, while encouraging to bulls, should not yet be mistaken for confirmation of a new market cycle. Demand indicators remain mixed, with institutional Bitcoin allocations showing signs of renewed interest even as retail spot-market activity remains tepid. Bitcoin’s ability to break through these critical resistance levels and sustain long-term holder conviction will be the deciding factor for broader crypto market confidence, particularly for assets like XRP that often move in correlation with institutional Bitcoin demand.
Bitcoin’s struggle to maintain bull-market confirmation metrics directly impacts capital allocation across crypto markets, making this cycle critical for the broader digital asset ecosystem.
Source: CryptoQuant, via Cointelegraph. Not financial advice.