On-chain data shows that the Bitcoin aSOPR indicator has encountered resistance at the historical intersection of bull and bear markets.
Bitcoin aSOPR fails to retest “Value=1” line
As an analyst pointed out in a CryptoQuant post, BTC aSOPR was recently rejected from breaking even.
The Spent Output Profit Ratio (SOPR for short) is an indicator that tells us whether Bitcoin investors are currently selling at a loss or at a profit.
The metric works by looking at the on-chain history of each coin sold to see what price it last moved at.
If a coin’s previous sale price was below the current value of BTC, that particular coin has just been sold at a profit. If it is otherwise, then the coin has realized a loss.
A modified version of this indicator, the Adjusted SOPR (aSOPR), excludes all coins held less than 1 hour before the sale. The benefit of this modification is that it removes any noise from the data that would not have had a significant impact on the market.
Well, here is a chart showing the trend of Bitcoin aSOPR over the last coupe years:
It looks like the value of the metric has been below one for the past few days | Source: CryptoQuant
If the value of the aSOPR is greater than one, it means that the average investor is selling at a profit right now. On the other hand, the fact that the metric is below the threshold suggests that the overall market is moving coins at a loss.
As you can see in the chart above, the analyst has marked the relevant trend zones for the Bitcoin aSOPR.
It appears as if the metric’s “1” value has acted as support during bull markets, while providing resistance during bears.
The importance of this line is that it represents the breakeven point for investors, as this is the level at which holders are just breaking even on their sales.
During bulls, investors see this line as a good buying opportunity, but during bears, they see it as an ideal selling point.
Recently, the aSOPR attempted a retest of this level but was pushed back into the red. If the historical pattern is to be trusted, this current trend would mean that Bitcoin is still stuck in a bear market.
BTC price
At the time of writing, the price of Bitcoin is hovering around $24.5k, up 7% over the past week.
The value of crypto has surged over the past day | Source: BTCUSD on TradingView Featured image by Peter Neumann on Unsplash.com, charts by TradingView.com, CryptoQuant.com
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