Data shows the Bitcoin aSOPR has recently been rejected from the neutral level as weakness continues to clutch the market.
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.
When the value of this metric is greater than one, it means the average investor is selling BTC at a profit 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.
Now, here is a chart that shows the trend in the Bitcoin aSOPR over the past couple of years:
Looks like the value of the metric has gone down in recent days | Source: Glassnode's The Week Onchain - Week 35, 2022
As you can see in the above graph, the Bitcoin aSOPR seems to have followed specific patterns during different phases 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).
Most recently, the Bitcoin aSOPR has once again failed a retest of this line, and rebounded back down. This shows that there is still weakness present in the market and the bear continues.
At the time of writing, Bitcoin’s price floats around $20.3k, down 5% in the past week.
BTC has observed some uplift during the last day or so | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com