The Bearish Signal in BTC and ETH Address Holdings and Short Profit Trends

The crypto markets of 2025 are at a crossroads, with on-chain metrics painting a nuanced picture of institutional strength and retail caution. While Bitcoin (BTC) and Ethereum (ETH) have benefited from regulatory tailwinds and ETF-driven inflows, emerging data suggests growing short-term selling pressure and profit-taking trends that could signal near-term downside risks. By dissecting address-level dynamics and profit-taking ratios, we uncover critical bearish signals that investors must not ignore.

Bitcoin's Shifting Holder Dynamics and Fading Momentum

Bitcoin's on-chain activity in Q3 2025 reveals a structural shift in ownership. The 7-day moving average of active addresses has plummeted to 660,000, the lowest in 12 months, indicating reduced retail participation and a migration to long-term storage or Layer 2 solutions like the Lightning Network according to Oak Research. This trend aligns with the "Bitcoin Great Rotation," where mid-tier holders distributed 123,173 BTC to "Mega Whales" holding 10,000+ BTC, signaling institutional confidence according to The Block. However, this concentration of holdings also raises liquidity concerns.

Price-wise, Bitcoin's recent stabilization between $108,000 and $118,000 masks underlying fragility. The asset has fallen below the Short-Term Holders' Cost Basis (~$112.5K), a critical threshold that historically marks the end of bullish phases according to Glassnode. The Relative Unrealized Loss metric stands at 3.1%, suggesting a mild bear phase but not extreme capitulation-a pattern consistent with mid-cycle corrections according to Glassnode. Meanwhile, miner revenue has declined from $50 million in Q3 2025 to $40 million, compounding pressure on the network's economic model according to Oak Research.

Ethereum's Outperformance and Hidden Vulnerabilities

Ethereum has outperformed Bitcoin in Q3 2025, with a 65% price surge driven by regulatory clarity and institutional adoption according to Bitwise. Staking activity hit 36.8 million ETH by quarter-end, a 3.08% increase from June, while the ETH/BTC ratio rebounded by 60%, regaining the 0.035 level according to Oak Research. These metrics reflect growing confidence in Ethereum's utility, particularly with the approval of U.S. spot ETFs and the completion of the "Fusaka" protocol upgrade according to Ad-Hoc News.

Yet, Ethereum's price action tells a different story. Despite the Dencun hard fork and ETF inflows, ETH struggled to hold above $3,180, drifting toward key support at $3,000 according to Mitrade. Whale selling has intensified, with one large holder offloading $56.77 million in ETH for a $9.3 million profit-a move that introduces short-term volatility according to Mitrade. The ETH/BTC ratio, while improved, remains far from its historical peak of 0.08, requiring Ethereum to reach $9,600 if Bitcoin stabilizes at $120,000 according to CryptoRank.

Short-Term Profit-Taking and Derivatives Market Signals

Both assets face mounting short-term profit-taking pressure. For Bitcoin, the on-chain MVRV Z-score for ETH and altcoins remains near 2, indicating the market is still below past cycle peaks-a bearish sign for momentum traders according to CoinGlass. Meanwhile, Bitcoin's spot ETFs recorded daily outflows ranging from –$150M to –$700M, signaling reduced institutional appetite for new exposure according to Glassnode. The Perpetual Market Directional Premium for Bitcoin has also cooled from $338M/month in April to $118M/month, reflecting a decline in speculative positioning according to Glassnode.

Ethereum's institutional inflows, while positive, remain moderate compared to Bitcoin's. This suggests Ethereum may still face growth headwinds if the broader market follows a typical crypto cycle according to CryptoRank. Additionally, the crypto leverage market expanded to $73.59 billion in Q3 2025, but this did not directly offset Ethereum's short-term selling pressure according to Galaxy.

Conclusion: A Cautionary Outlook for Near-Term Markets

While institutional adoption and regulatory progress provide a long-term tailwind for Bitcoin and Ethereum, the on-chain data underscores near-term risks. Bitcoin's declining active addresses, fading cost basis, and ETF outflows, coupled with Ethereum's price resistance and whale-driven selling, highlight a market grappling with profit-taking and liquidity stress. Investors should remain vigilant, balancing optimism about institutional demand with the reality of short-term bearish signals. As the crypto winter of 2025 unfolds, the key will be distinguishing between cyclical corrections and structural shifts in market dynamics.