Bitcoin’s (BTC) Late-Stage Rally: Expert Warns Cycle Exhaustion Traps New Buyers

Bitcoin's final surge looks tempting—but seasoned analysts spot trouble brewing beneath the surface.

The Last Gasp Rally

That late-stage momentum pulling in fresh capital? Veteran traders recognize the pattern—it's the market's final shakeout before exhaustion sets in. New buyers chase peaks while smart money prepares exits.

Cycle Warning Signs

Technical indicators flash divergence signals as retail FOMO overwhelms rational analysis. The classic trap snaps shut when optimism peaks and fundamentals weaken.

Timing the Turning Point

History shows these exhaustion phases precede significant corrections. The current cycle mirrors previous tops where euphoria masked underlying vulnerabilities.

Wall Street's favorite game: convincing Main Street that late-cycle rallies are just the beginning—because someone has to hold the bags when the music stops.

Profitability Drying Up

In his latest analysis on X, Wedson flagged the SOPR Trend Signal, a reliable indicator of blockchain profitability, which now indicates that investor gains are drying up. He stressed that never before in Bitcoin’s history have investors accumulated BTC so late and at such elevated prices.

The Short-Term Holder (STH) Realized Price is currently hovering around $111,400, and serves as a critical benchmark for institutions that ideally should have built positions at much lower levels. To top that, Bitcoin’s Sharpe Ratio is notably weaker than in 2024, which depicts a deteriorating risk-to-return profile and limited profit potential. As such, these are some of the factors that may dampen institutional appetite despite the allure of new all-time highs.

Social interest, meanwhile, has fallen sharply, and the crypto analyst predicted that attention will only rebound because of altcoins rather than Bitcoin. According to him, market makers are already rotating capital by partially selling BTC and redirecting stablecoin reserves toward altcoins after a continued period of accumulation.

While bitcoin may still climb to fresh records, Wedson argues that its profitability will remain lackluster compared to the compelling opportunities emerging across the altcoin market. He pointed out that early 2022 buyers are enjoying 600% gains, but those accumulating now face a dramatically different landscape.

Declaring 2025 an active Altcoin Season, Wedson urged investors to shift focus and emphasized that many altcoins currently boast far more attractive on-chain metrics and risk-reward profiles than Bitcoin.

Exchange Inflows Surge

During the September 7-15 rally, CryptoQuant found that outflows exceeded inflows, which supported the then-bullish momentum. Large BTC outflows, such as nearly 65K leaving exchanges at the end of August and early September, typically indicate accumulation in personal wallets and reduced immediate selling, which often coincides with price recoveries.

However, heightened selling activity was observed around September 17-19, as inflows spiked to nearly 40K BTC, which pushed BTC down from $117K to $112K. Following September 20, outflows weakened even further, meaning more coins remained on exchanges and selling pressure dominated.

Currently, inflows remain high while outflows are weak, which means that short-term downside risk persists. If outflows resume, accumulation could fuel a strong rebound from the current level; otherwise, further declines remain possible.