On-chain data shows that Bitcoin aSOPR’s gain-loss link has continued to act as a resistance to the crypto’s price.
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Bitcoin aSOPR bounces back from the breakeven line
As noted by an analyst in a CryptoQuant afterthe aSOPR value equal to ‘1’ line now works as resistance for about 185 days.
the “Issued output earnings ratio” (or SOPR for short) is an indicator that tells us whether the average Bitcoin investor is currently selling at a profit or at a loss.
When the value of this stat is greater than 1, it means that the holders as a whole are currently moving their coins with some profit.
On the other hand, if the indicator’s value is below the mark, it means that the overall market is currently losing money.
Of course, SOPR values that are exactly equal to 1 mean that the average holder is just breaking even on their investment.
A modified version of the metric is the “Custom SOPR(aSOPR), which excludes the trades of all those coins that have moved again within just an hour of their last transfer.
Here is a chart showing the trend in Bitcoin aSOPR over the past few 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 of the post has highlighted the relevant trend zones for the Bitcoin aSOPR.
During historical bear periods, the indicator has always found sharp resistance at the intersection between the gain and loss regions, thus staying below the 1 level.
Even in the current bear market, the stat has remained at values of less than one. It has made several attempts to break into the profit zone, but so far it has been rejected every time.
The reason behind this is that the aSOPR reaching a value of 1 suggests that investors, who had previously suffered losses, are now selling at the same price they got. Psychologically this seems like getting their money “back” to these holders. Hence, a large number of investors usually dump at this point, providing resistance to the price.
In the past, significant breaks above the gain/loss node signaled the start of another bull rally. Since the Bitcoin aSOPR is still stuck in the loss zone, it is safe to assume that the market has yet to see through this bear.
At the moment of writing, The price of Bitcoin hovers around $18.8k, down 5% over the past week.
BTC has been moving sideways | Source: BTCUSD on TradingView
Featured image from Marco Pagano on Unsplash.com, charts from TradingView.com,