On-chain data shows that the Bitcoin ASOPR indicator has found resistance at the historic junction between bull and bear markets.
Bitcoin ASOPR fails retesting “price=1” line
As pointed out by an analyst in a Cryptoquant post, BTC ASOPR has recently been rejected with a breakout mark.
The “Expense Output Profit Ratio” (or SOPR for short) is an indicator that tells us whether bitcoin investors are currently selling at a loss or a profit.
The metric works by looking at the on-chain history of each coin sold to see what price it was last carried.
If the previous selling price of a coin was less than the current price of BTC, then that particular coin is now sold at a profit. Whereas if it is otherwise, the coin realized some loss.
A modified version of this indicator, the “adjusted SOPR” (aSOPR), excludes from its calculation all coins that were held for less than 1 hour before being sold. The advantage of this modification is that it removes all noise from the data which has no significant impact on the market.
Now, here’s a chart that shows the trend in Bitcoin ASOPR over the years:
Looks like the value of the metric has been below one in recent days | Source: CryptoQuant
When the value of the ASOPR is greater than one, it means that the average investor is currently selling at a profit. On the other hand, a metric falling below the threshold suggests that the coin is making losses in the overall market.
As you can see in the graph above, the analyst has marked relevant areas of trend for Bitcoin ASOPR.
It seems that during bull markets, the metric’s “1” value has acted as support, while during bears it has provided resistance.
The significance of this line is that it has a break-even mark for investors as the holders are breaking even on their sell at this price.
During bull markets, investors see this line as a good buying opportunity, but in bears they see it as an ideal selling point.
Recently, aSOPR attempted to retest this mark, however, it was rejected back in the loss zone. If historical patterns are anything to go by, this current trend would mean that Bitcoin is still stuck in a bear market.
At the time of writing, bitcoin is priced around $24.5k, up 7% over 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