Recent on-chain data analysis indicates that a Bitcoin metric, known as the Spent Output Profit Ratio (SOPR), has repeatedly tested the threshold between bearish and bullish market conditions. However, a definitive break has yet to occur.
Understanding the Bitcoin SOPR
The Bitcoin SOPR provides insights into whether the average Bitcoin investor is currently selling at a profit or loss. When the SOPR is greater than 1, it signifies that the market is predominantly realizing profits. Conversely, values below 1 indicate a preponderance of selling at a loss. A SOPR value of exactly 1 suggests a market equilibrium, where profits and losses balance each other out, implying that the average investor is breaking even on their sales.
Bitcoin SOPR in Recent Years
The Bitcoin SOPR has been lingering around the break-even mark, as illustrated in the following chart:
Bitcoin SOPR trend over the last couple of years | Source: CryptoQuant
The graph also reveals the trend of the Adjusted SOPR (ASOPR), which excludes sales of coins sold within an hour of their previous sales. It’s evident that the Bitcoin ASOPR has been marginally in the loss zone, consistently retesting the break-even point from below. This suggests that, on average, holders are currently selling at a slight loss.
Short-Term Holder SOPR
Short-term holders (STHs) – investors holding their coins for less than 155 days – provide a more nuanced view of the market. The Bitcoin SOPR for these investors has historically correlated with price uptrends whenever it has entered the profit zone. However, the STH SOPR has recently been in the red zone, indicating that these holders are incurring more losses than the broader market.
Currently, the indicator is once again at the break-even mark, which could signal a potential market shift if a break occurs. This coincides with Bitcoin’s recent price surge past the $27,000 level.
For those interested in tracking these metrics, the cryptoview.io application offers a comprehensive view of Bitcoin’s on-chain data.
Start now using our tools for free.
Featured image from Art Rachen on Unsplash.com, charts from TradingView.com, CryptoQuant.com
Tags: Bitcoin, Bitcoin Break, Bitcoin Bull-Bear Junction, Bitcoin short-term holders, Bitcoin SOPR, btc, btcusd
