Bitcoin SOPR Suggests Market Nowhere Near The Bottom

Keshav Verma

1 year ago

3 mins read

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According to on-chain data, current Bitcoin SOPR trend suggests the market may be nowhere near the price bottom.

Bitcoin SOPR Still Some Distance Above The “One” Level

As pointed out by an analyst in a CryptoQuant post, the BTC SOPR hints there may be some ways to go still before a bottom forms.

The “spent output profit ratio” (or SOPR in brief) is an indicator that tells us whether investors are selling at a profit or a loss right now.

The metric works by evaluating the history of each coin on the chain to see which price it was last moved at. If this price was less than the current price (that is, the selling price), then the coin sold at a profit.

On the other hand, the last price being more than the current one would imply the investor realized a loss on this coin.

When SOPR has a value more than one, it means the overall market is making a profit at the moment. While ratio values below the threshold imply a realization of losses.

Now, here is a chart that shows the trend in the Bitcoin SOPR over the past few years:

Looks like the indicator's value is above 1 right now | Source: CryptoQuant

In the above graph, the quant has marked the important points of trend. It seems like bottoms have historically formed whenever the Bitcoin SOPR has dipped below the value = 1 mark.

The significance of this “one” level is that investors are just breaking even at this point. The value drops any further and they are selling at a loss.

Relate Reading | TA: Bitcoin Recovers Losses But Here’s Why $41.5K Could Prevent Gains

After capitulation, there aren’t many sellers left in the market normally, hence why a bottom forms during such periods.

Now, looking at the current trend, it seems like the value of the Bitcoin SOPR is around 1.31 right now. This is still a bit above the 1 level, which could suggest there may be more downside in the store for the crypto before a new bottom formation takes place.

However, it’s also possible the price may see a temporary rebound here, as it already did once earlier in the year around a similar SOPR value.

BTC Price

At the time of writing, Bitcoin’s price floats around $40.7k, up 1% in the last seven days. Over the past month, the crypto has lost 3% in value.

The below chart shows the trend in the price of the coin over the last five days.

BTC's price looks to have surged up over the past twenty-four hours | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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