Bitcoin aSOPR Profit-Loss Junction Continues To Act As Resistance
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On-chain data shows that the Bitcoin aSOPR profit-loss crossover has continued to resist the price of the crypto.
Bitcoin aSOPR bounces back down from the breakout line
As noted by an analyst in CryptoQuant, an aSOPR value equal to line 1 has acted as resistance for about 185 days.
The “Spent Output Profit Ratio” (or SOPR for short) is an indicator of whether the average Bitcoin investor is currently selling at a profit or a loss.
When this metric has a value greater than 1, it means that holders as a whole are currently moving their coins for some profit.
On the other hand, a value lower than the value of the indicator suggests that the overall market is currently in a loss.
Naturally, SOPR values exactly equal to 1 mean that the average holder is just about to reach their investment.
The modified version of the meter is “Adjusted SOPR” (aSOPR), which excludes from the data the transactions of all coins that moved again within just one hour of their last move.
Now here is a graph showing the trend of Bitcoin aSOPR over the last couple of years:
The value of the metric seems to have been in the loss region for a while now | Source: CryptoQuant
As you can see in the chart above, the quantum of the message has marked the relevant trend areas of Bitcoin aSOPR.
During historical bear periods, the indicator has always found strong resistance at the intersection of the profit and loss zones and thus has remained below the 1 level.
Even in the current bear market, the meter has remained below one. It has made several attempts to break into the winning zone, but so far has been rebuffed each time.
The reason for this is that an aSOPR reaching a value of 1 indicates that investors who were previously at a loss are now selling at the same price they received. Psychologically, this seems to get its money back. Therefore, a large number of investors usually fall at this stage, which opposes the price.
In the past, decent breaks above the break-even point have signaled the start of a new bull rally. With Bitcoin aSOPR still trapped in the loss zone, it is safe to assume that the market is yet to see through this bear.
At the time of writing, Bitcoin is hovering around $18.8,000, down 5% from last week.
BTC has been moving sideways | Source: BTCUSD on TradingView
Featured image from Marco Pagano on Unsplash.com, charts from TradingView.com, CryptoQuant.com