Bitcoin aSOPR Profit-Loss Junction Continues To Act As Resistance

Keshav Verma

1 year ago

3 mins read

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On-chain data shows the Bitcoin aSOPR profit-loss junction has continued to act as resistance to the price of the crypto.

Bitcoin aSOPR Bounces Back Down From The Breakeven Line

As pointed out by an analyst in a CryptoQuant post, the aSOPR value equal to ‘1’ line has been acting as resistance for around 185 days now.

The “Spent Output Profit Ratio” (or SOPR in short) is an indicator that tells us whether the average Bitcoin investor is selling at a profit or at a loss right now.

When the value of this metric is greater than 1, it means the holders as a whole are moving their coins at some profit currently.

On the other hand, the indicator’s value being lesser than the mark implies the overall market is realizing loss at the moment.

Naturally, SOPR values exactly equal to 1 signify that the average holder is just breaking even on their investment.

A modified version of the metric is the “Adjusted SOPR” (aSOPR), which excludes from the data the transactions of all those coins that moved again within only an hour of their last transfer.

Now, here is a chart that shows the trend in the 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 above graph, the quant from the post has marked the relevant zones of trend for the Bitcoin aSOPR.

During historical bear periods, the indicator has always found sharp resistance at the junction between the profit and loss regions, and has thus remained locked below the 1 level.

In the current bear market as well, the metric has been staying at values less than one. It has made several attempts to break into the profit zone, but so far it has been rejected back down each time.

The reason behind this is that the aSOPR reaching a value of 1 suggests investors, who were previously in loss, are now selling at the same price they got in. Psychologically, this appears to these holders as gaining their money “back.” Hence, a large amount of investors usually dump at this point, providing resistance to the price.

In the past, proper breaks above the profit-loss junction have meant the start of a new bull rally. Since the Bitcoin aSOPR is still trapped in the loss zone, it’s safe to assume the market is yet to see through this bear.

BTC Price

At the time of writing, Bitcoin’s price floats around $18.8k, down 5% in the past week.

BTC has been moving sideways | Source: BTCUSD on TradingView

Featured image from Marco Pagano on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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