On-chain data suggests that the current Bitcoin SOPR trend may indicate that the market is not at the bottom.
Bitcoin SOPR Still Some Distance Above The “One” Level
In a CryptoQuant article, an analyst points out that there are still ways to go before the bottom forms.
The “spent output profit ratio” (or SOPR in brief) is an indicator that tells us whether investors are selling at a profit or a loss right now.
To calculate the metric, we look at the history of each individual coin to determine the price it last traded. The coin was sold for a profit if the price is lower than its current price.
The investor would lose if the price of the coin was higher than its current value.
On-Chain Data: Bitcoin Whales Buy The Dip As BTC Drops To $39k| On-Chain Data: Bitcoin Whales Buy The Dip As BTC Drops To $39k
SOPR that has more than one value means that the entire market is currently making profits. Ratios below the threshold indicate losses.
Here’s a chart showing the Bitcoin SOPR trend over the last few years.
Source: CryptoQuant| Source: CryptoQuant
The quant marked the key points of the trend in the graph above. If the Bitcoin SOPR falls below the 1 mark, it seems that bottoms have always formed.
The significance of this “one” level is that investors are just breaking even at this point. They are now selling at a loss as the value of their investments drops further.
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After capitulation, there aren’t many sellers left in the market normally, hence why a bottom forms during such periods.
The current trend suggests that the Bitcoin SOPR’s value is currently around 1.31. The current trend is slightly above 1.31, suggesting that the cryptocurrency may have more upside before it reaches a bottom.
However, it’s also possible the price may see a temporary rebound here, as it already did once earlier in the year around a similar SOPR value.
BTC price
At the time of writing, Bitcoin’s price floats around $40.7k, up 1% in the last seven days. In the past month, crypto lost 3%.
The chart below shows how the currency’s price has changed over the course of five days.
BTC seems to have seen a surge in price over the last twenty-four hour | Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts