Bitcoin’s Bull Run Cools: Profit Margins Squeeze After Record ’Uptober’ Rally

Bitcoin's explosive October surge hits the brakes as profit-taking pressures mount across crypto markets.

The Cooling Effect

Market momentum slows dramatically following Bitcoin's historic 'Uptober' performance. Trading volumes contract while institutional investors reassess positions amid tightening margins.

Profit Pressure Builds

Data reveals declining profit percentages across major exchanges. Long-term holders begin rotating positions as short-term traders face compressed returns. The classic crypto cycle pattern emerges—parabolic moves followed by consolidation phases.

Institutional Calculus

Wall Street's crypto desks adjust strategies while retail investors watch leverage ratios carefully. Everyone's chasing alpha but finding mostly beta—the eternal struggle of modern finance.

What's Next for Digital Gold?

Technical indicators suggest support levels holding for now. Whether this represents healthy correction or trend reversal remains the billion-dollar question. One thing's certain: in crypto, the only constant is volatility itself.

Momentum cools after ‘Uptober’ surge

Bitcoin’s bullish streak is now shaky in October, which many dub “Uptober” because it is a historically bullish month for Bitcoin. 

Following the market crash that saw Bitcoin drop to around $104,000, the digital asset experienced a brief rally that took prices to over $113,000 on October 21. However, that momentum was not sustained as prices dropped not too long after to around $107,000, as it struggles to sustain a breakout above $108,000.

Analysts are saying that the rally is faltering due to slowing trading volumes and cooling derivatives activity.

Bitcoin net unrealized profit/loss (NUPL). Source CryptoQuant

Data from CryptoQuant indicates that the net unrealized profit and loss margins across bitcoin wallets have thinned and is currently negative as the market enters what analysts describe as a “profit compression zone.” 

CryptoQuant’s 7-day trend data show that exchange reserves are slowly going up, and this signals increasing selling pressure from holders, which also means increasing volatility in the derivative markets.

Shrinking profitability combined with declining realized gains suggests the market is running out of fresh momentum.

Bitcoin exchange reserve. Source CryptoQuant

BTC goes from disbelief to hesitation

Market behavior over the past week suggests investors are moving from disbelief, when traders doubt the sustainability of a recovery, to hesitation, where fading conviction dampens upside potential. 

According to CryptoQuant’s analysis, Bitcoin funding rates have hovered around zero after a week of mild negative readings, and it’s now back to the mild negative readings, indicating a cautious but indecisive market stance. 

Bitcoin funding rate across exchanges. Source: CryptoQuant

Currently, the funding rates are rising slowly. Given that the trend is currently on the rise, it can be inferred that long position traders are willing to pay short position traders, but the pressure of short position traders is still relatively high. The Short Term Output Profit Ratio on CryptoQuant stands at 1, meaning short-term investors are selling at breakeven rates or with a little profit.

This cooling sentiment follows a volatile start to October, when billions were wiped from derivatives positions in a flash correction. Analysts say that while the long-term structure remains intact, the short-term psychology of the market has shifted.

The key question now, according to analysts, is whether this slowdown is merely a cooling-off phase or the beginning of a more sustained correction. Historical patterns show that Bitcoin often pauses to reset after sharp gains, with consolidation phases lasting several weeks before another leg higher.

For now, Bitcoin remains in profit on average, but barely. So far, the shrinking gap between the active investors’ cost basis and the current price is a sign that conviction is waning.

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