Bitcoin Profitability Recovers as Investment Demand Looms... Crypto.com Analyzes Rate and ETF Outflows

Bitcoin (BTC)’s on-chain profitability is improving as inflation and rising Treasury yields emerge as burdens on the cryptocurrency market. Crypto.com analyzed in a report that Bitcoin’s Spent Output Profit Ratio (SOPR) has exceeded the 1.0 benchmark for three consecutive weeks, recording the longest period of sustained profitability since early 2026.

However, continued outflows from U.S. spot exchange-traded funds (ETFs) have created a divergence between improving on-chain metrics and institutional capital flows. The report noted that August U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) rose 0.4% month-on-month, with annual CPI growth at 3.4%, surpassing the Federal Reserve’s 2.0% target.

Persistent inflation, rising oil prices due to Middle East geopolitical risks, and higher bond yields have added pressure on markets. The report cited West Texas Intermediate (WTI) crude oil breaking $100 per barrel, while U.S. 10-year Treasury yields hit a 2023 October high of 4.97% and 30-year yields reached 5.35%. These factors contributed to declines in major U.S. indices: Nasdaq down 0.70%, S&P 500 down 0.80%, and Dow Jones down 1.60%.

Spot Bitcoin ETFs saw $463 million in net outflows last week, while Ethereum (ETH) spot ETFs recorded $197 million in outflows, totaling $660 million across both products.

Crypto.com also highlighted divergent asset performance. While most major assets declined, Polkadot (DOT) and Filecoin (FIL) maintained gains. In decentralized finance (DeFi), indices related to real-world assets (RWA) and oracles saw declines.

Polkadot’s ecosystem is exploring the introduction of its own decentralized stablecoin, dotUSD, with community voting on proposal 1944 regarding issuance. Meanwhile, payment firms are expanding crypto integration: Visa connects VisaNet data to on-chain lending infrastructure to support crypto card issuers, and PayPal unveiled PYUSDx, a corporate platform enabling enterprise clients to issue custom tokens backed by PYUSD.

Regulatory developments include proposed U.S. legislation (CLARITY) that would grant SEC and CFTC oversight for protocols controlled by specific entities, excluding fully decentralized networks. Germany introduced a bill to remove tax exemptions on virtual assets held over 12 months, bringing them under capital gains tax. Ethereum’s EIP-8141 proposes enabling transaction fees to be paid in stablecoins or other assets via ‘frame transactions,’ reducing user burden.

Crypto.com concludes that Bitcoin’s improving on-chain profitability and expanding crypto financial services coexist with market pressures from inflation, interest rates, and ETF outflows. Whether this recovery translates into sustained investment demand will depend on monitoring both on-chain flows and institutional capital inflows.