On-chain data shows that the Bitcoin aSOPR profit and loss cross continues to act as resistance to the cryptocurrency’s price.
Bitcoin aSOPR bounces below the breakeven line
As pointed out by an analyst at CryptoQuant Mailthe aSOPR value of line ‘1’ acts as resistance for about 185 days now.
The Output Spent Profit Ratio (or SOPR for short) is an indicator that tells us whether the average Bitcoin investor is selling at a profit or at a loss at the moment.
When the value of this scale is greater than 1, this means that the owners as a whole are currently moving their coins with some profit.
On the other hand, the value of the index below the mark means that the market as a whole is aware of the loss at the moment.
Of course, SOPR values exactly equal to 1 indicate that the average holder breaks his investment.
The modified version of the scale is “modified SOPR” (aSOPR), which excludes from the data the transactions of all those coins that moved back within just one hour of their last transfer.
Now, here’s a chart showing the trend in Bitcoin aSOPR over the past two 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 quantity from the post outlines relevant trend areas for Bitcoin aSOPR.
During historical downturns, the indicator has always found sharp resistance at the intersection between its profit and loss areas, and therefore remained closed below level 1.
Also in the current bear market, the scale has remained at values below one. It has made several attempts to break into the profit zone, but so far it has been rejected every time.
The reason for this is that an aSOPR of 1 indicates that investors, who were previously at a loss, are now selling at the same price they got. Psychologically, this seems to these holders that they are making their money ‘again’. Thus, a large number of investors usually ditch at this point, providing price resistance.
In the past, proper breakouts above the profit and loss intersection meant the start of a new bullish rally. With Bitcoin aSOPR still trapped in its loss zone, it is safe to assume that the market has not yet seen this bear.
At the time of writing, Bitcoin price is hovering 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