Is Bitcoin Yet To Top In This Cycle? What aSOPR Suggests
Bitcoin has been in freefall recently, but this popular indicator is yet to reach the same highs as the last two cycles. Is the real top still ahead for the asset? Bitcoin aSOPR Has Been Consolidating For The Last Two Ye...
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Older archive item. Useful for background and entity history, but not a fresh market-moving signal.
Bitcoin has been in freefall recently, but this popular indicator is yet to reach the same highs as the last two cycles. Is the real top still ahead for the asset?
Bitcoin aSOPR Has Been Consolidating For The Last Two YearsAs pointed out by an analyst in a CryptoQuant Quicktake post, the Bitcoin aSOPR has been consolidating between converging trendlines for nearly two years. The Spent Output Profit Ratio (SOPR) is an indicator that tells us whether the BTC investors are selling their coins at a profit or loss.
When the value of this metric is greater than 1, it means the average holder is transferring their coins at some net profit on the blockchain. On the other hand, the indicator being below this threshold implies the dominance of loss taking on the network. Naturally, the SOPR being exactly equal to 1 suggests profit realization is canceling out loss realization. In other words, the investors as a whole are just breaking even on their sales.
In the context of the current discussion, the version of the SOPR that’s of interest is the Adjusted SOPR (aSOPR). This indicator eliminates from the data sales of all coins that moved within an hour of their last movement. Such moves are usually relay transactions and carry no consequences for the market.
Now, here is a chart that shows the trend in the Bitcoin aSOPR over the last few years:
As the quant has highlighted in the graph, the 2017 and first-half 2021 bull runs both interestingly topped out as the aSOPR rose to the red line. This level corresponds to a notable degree of profit realization among the investors.
Similarly, the bear markets of the last two cycles found their bottoms at about the same time as the aSOPR hitting a low at the green line, some distance below the 1 mark. At this level, loss-taking is dominant, so weak hands capitulating and resolute entities accumulating their coins could be behind the bottom formation pattern.
In the current cycle so far, the aSOPR hasn’t touched the red line. Instead, the indicator has been stuck in consolidation inside two converging trendlines in a mild profit-taking region for almost the last two years.
Considering the pattern of the last two cycles, it’s possible that the latest one hasn’t hit its top yet. Another possibility, however, could very well be that the aSOPR simply isn’t going to touch the red level in this cycle at all.
The Bitcoin aSOPR is now slowly inching toward the end of its converging channel, so a breakout one way or the other could happen soon. It only remains to be seen which direction the indicator will exit.
BTC PriceAt the time of writing, Bitcoin is trading around $86,300, down 9% over the last week.
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This bitcoin story adds another data point to the current market tape and is useful when read alongside nearby source coverage.
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