On-chain data shows that the Bitcoin aSOPR indicator has found resistance at the historical crossover between bulls and bears.
Bitcoin aSOPR fails to retest the ‘value=1’ line
As one of the analysts pointed out, CryptoQuant After that, BTC aSOPR was rejected from the break even mark recently.
The “Output Profit Ratio“(or SOPR for short) is an indicator that tells us whether Bitcoin investors are selling at a loss or at a profit at the moment.
The metric works by looking at the chain history of each coin sold to see what price it was last quoted.
If the previous selling price of any coin is lower than the current value of BTC, then that particular coin has just been sold at a profit. Whereas if it was different, the coin realized some loss.
The revised version of this index, “adjusted SOPR” (aSOPR), excludes from its calculations all currencies that have been held for less than one hour before being sold. The benefit of this modification is that it removes all the noise from the data that did not have any significant effects on the market.
Now, here’s a chart showing the trend in Bitcoin aSOPR over the previous years:
Looks like the value of the metric has been below one in recent days | Source: CryptoQuant
When the value of aSOPR is greater than one, it means that the average investor is selling at a profit now. On the other hand, a measure that is below the bottom line indicates that the market as a whole is moving coins at a loss.
As you can see in the chart above, the analyst has identified relevant trend areas for Bitcoin aSOPR.
It appears that during bull markets the “1” value of the scale acted as support, while it offered resistance during bears.
The significance of this line is that it represents the break-even mark for investors as the holders of this value break their sell-off.
During the bulls, investors think this line is a good buying opportunity, but in bears it is an ideal selling point.
Recently, aSOPR attempted to retest this marker, however, it was rejected again in the loss zone. If the historical pattern is anything to go by, this current trend means Bitcoin is still stuck in a range alcohol market.
At the time of writing this report, Bitcoin price It is floating around $24.5K, up 7% in the past week.
The value of the crypto has surged up during the past day | Source: BTCUSD on TradingView
Featured image from Peter Neumann on Unsplash.com, charts from TradingView.com, CryptoQuant.com