Data from the Bitcoin aSOPR profit/loss junction shows that the price of crypto has continued to be resisted by it.
Bitcoin aSOPR Rebounds From the Breakeven Line
As pointed out by an analyst in a CryptoQuant post, the aSOPR value equal to ‘1’ line has been acting as resistance for around 185 days now.
The “Spent Output Profit Ratio” (or SOPR in short) is an indicator that tells us whether the average Bitcoin investor is selling at a profit or at a loss right now.
If the metric’s value is higher than 1, then it indicates that all holders are currently moving their coins for a profit.
On the other hand, the indicator’s value being lesser than the mark implies the overall market is realizing loss at the moment.
The SOPR value of 1 is an indication that an average shareholder has just made a loss on their investment.
A modified version of the metric is the “Adjusted SOPR” (aSOPR), which excludes from the data the transactions of all those coins that moved again within only an hour of their last transfer.
Here’s a chart showing the Bitcoin aSOPR trend over the past couple years.
CryptoQuant: The value of this metric appears to be in the decline region for some time now. Source: CryptoQuant| Source: CryptoQuant
You can see that the graph shows the trend areas for Bitcoin aSOPR as marked by the quant.
The indicator has remained below the 1-level during bear times in the past.
It has also stayed at lower values than 1 during this bear market. Although it attempted to enter the profit zone several times, each attempt was rejected.
This is because investors who had previously been in losses are now buying at the same price as they bought in. Psychologically, this appears to these holders as gaining their money “back.” Hence, a large amount of investors usually dump at this point, providing resistance to the price.
Past bull rallies have been marked by breaks above the profit loss junction. Since the Bitcoin aSOPR is still trapped in the loss zone, it’s safe to assume the market is yet to see through this bear.
BTC price
At the time of writing, Bitcoin’s price floats around $18.8k, down 5% in the past week.
BTC is moving in a sideways direction | Source: BTCUSD on TradingView
Featured image by Marco Pagano at Unsplash.com. Charts from TradingView.com. CryptoQuant.com.