Data shows the Bitcoin Adjusted Spent Output Profit Ratio (aSOPR) is retesting the historical bull-bear junction. Will a break be found this time?
Bitcoin aSOPR Is Currently Doing One other Rest Of 1.0 Level
As per the most recent weekly report from Glassnode, a successful retest here could suggest a meaningful regime shift within the BTC market. The “Spent Output Profit Ratio” (SOPR) is an indicator that tells us whether Bitcoin investors are selling their coins at a profit or at a loss without delay.
When the worth of this metric is bigger than 1, it means the common holder out there is moving coins at some profit currently. Alternatively, values below the edge imply the general market is realizing some loss in the mean time. The SOPR being exactly equal to 1 naturally suggests that investors are only breaking even on their selling without delay.
A modified version of this indicator is the “Adjusted SOPR” (aSOPR), which filters out all selling of coins that was done inside only an hour of said coins being first acquired. The most important advantage of this modification is that it removes noise from the information that wouldn’t have any noticeable impacts available on the market anyhow.
Now, here’s a chart that shows the trend within the 7-day exponential moving average (EMA) Bitcoin aSOPR over the past couple of years:
The 7-day EMA value of the metric seems to have gone up in recent days | Source: Glassnode’s The Week Onchain – Week 3, 2023
As shown within the above graph, the 7-day EMA Bitcoin aSOPR has sharply risen recently and has reached the 1 level for the primary time for the reason that pre-FTX crash. This level has been historically significant for BTC, because the crypto has often encountered resistance at it during bear market periods.
The rationale behind that is the indisputable fact that the aSOPR equal to 1 line represents the break-even mark. At any time when the metric increases to this mark, it means enough holders are back in a state of neutrality that they’re able to recoup their investment.
Psychologically, investors see this as getting their previously lost money “back” and hence large-scale dumping takes place here, thus providing impedance to the crypto’s price.
A successful break above this level would suggest, nonetheless, that there’s enough demand within the Bitcoin market without delay that holders are able to understand their profits and buyers are present to soak up this selling. For this reason, such breaks have normally led to a transition from bear to bull markets.
When bull markets take hold, the effect of the aSOPR 1 level flips, and the road as an alternative starts providing support to the value of BTC.
BTC Price
On the time of writing, Bitcoin is trading around $21,200, up 23% within the last week.
Looks just like the rally has come to a halt since hitting the $21,000 level | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com