According to on-chain data, the Bitcoin aSOPR indicator found resistance at historical junctions between bear and bull markets.
Bitcoin aSOPR Fails Retest Of The “Value=1” Line
An analyst pointed out in CryptoQuant that the BTC SOPR was recently rejected at the breakeven point.
The “Spent Output Profit Ratio” (or SOPR in short) is an indicator that tells us whether Bitcoin investors are selling at a loss or at a profit right now.
To calculate the metric, you need to look at each coin’s on-chain history in order to determine its last price.
The coin will be sold for a profit if the price paid previously was higher than BTC’s current value. While if it’s otherwise, then the coin realized some loss.
A modified version of this indicator, the “Adjusted SOPR” (aSOPR), excludes from its calculations all those coins that were held for less than 1 hour before being sold. The benefit of this modification is that it removes all noise from the data that wouldn’t have had any significant implications on the market.
This chart shows how Bitcoin aSOPR has changed over time.
Recent data shows that the value of this metric was below one. Source: CryptoQuant| Source: CryptoQuant
If the aSOPR value is higher than 1, it indicates that the average investor is making a profit. The metric that is less than one indicates the market is losing coins.
You can see that the analyst highlighted the areas of interest for Bitcoin aSOPR in the graph.
It seems like during bull markets, the “1” value of the metric has acted as support, while during bears it has provided resistance.
This line signifies that investors are at the breakeven mark.
In bull markets, this line is viewed as a buying opportunity. But in bear markets, it’s a selling point.
Recent attempts by the aSOPR to retest the mark were unsuccessful. It was then rejected and moved back into the Loss Zone. This current trend, if the history pattern is any indication, would indicate that Bitcoin remains in a bearish market.
BTC Prices
At the time of writing, Bitcoin’s price floats around $24.5k, up 7% in the past week.
Cryptocurrency's value has risen in the last day. Source: TradingView - BTCUSD| Source: BTCUSD on TradingView
Featured Image by Peter Neumann, Unsplash.com. Charts from TradingView.com and CryptoQuant.com.