According to data, the Bitcoin SOPR was rejected recently at neutral levels as the market continues to be dominated by weakness.
Bitcoin aSOPR Rebounds From The “1” Mark As Investors Sell The Rally
As per the latest weekly report from Glassnode, the “get my money back” effect strikes the crypto once again as weakness continues in the market.
The “Spent Output Profit Ratio” (or SOPR in short) is an indicator that tells us whether the overall Bitcoin market is currently selling at a profit or at a loss.
If this metric has a greater value than 1, it indicates that the average investor is making a profit selling Bitcoin right now.
On the other hand, the indicator’s value being below the mark implies the market as a whole is realizing some loss at the moment.
A modified version of the SOPR is the “Adjusted SOPR” (aSOPR), which filters out transactions of all those coins that moved again within an hour of being last transferred. This helps remove noise that doesn’t have any noticeable impacts on the market.
Here’s a chart showing the Bitcoin aSOPR trend over the last couple years.
Source: Glassnode's The Week Onchain - Week 35, 2022| Source: Glassnode's The Week Onchain - Week 35, 2022
The graph above shows that the Bitcoin aSOPR appears to have followed certain patterns in different stages of the market.
It seems like during bull markets the “aSOPR=1” line has usually acted as support, while the level has provided resistance during bear markets.
The reason behind this trend is that the “1” value represents the breakeven point for the market as at this point investors are selling neither at profit nor at loss.
During bulls, when the metric reaches this point investors start “buying the dip” as they see value in accumulating more around their cost basis.
However, in bear periods, investors rather prefer to sell any rally as soon as the price gets back around their cost basis since holders see the breakeven mark as “getting their money back” (after losing it to bear losses initially).
The Bitcoin aSOPR recently failed a retest and bounced back. The bear is continuing to be strong despite the fact that the market continues to show weakness.
BTC Prices
At the time of writing, Bitcoin’s price floats around $20.3k, down 5% in the past week.
Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Featured Image from Kanchanara, Unsplash.com. Charts from TradingView.com and Glassnode.com.