Is The Bitcoin Bottom In Yet? Here’s What aSOPR Metric Suggests

Keshav Verma

1 year ago

3 mins read

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A quant has explained using past trends of the Bitcoin adjusted Spent Output Profit Ratio (aSOPR) whether the current cycle has yet met all the bottom conditions.

Bitcoin aSOPR EMAs Are Approaching Golden Cross

As an analyst in a CryptoQuant post explained, the aSOPR EMAs are looking to form a golden cross soon. The “Spent Output Profit Ratio” (SOPR) indicates whether the average Bitcoin investor is selling at a profit or at a loss right now.

The “Adjusted SOPR” (aSOPR) is a modified version of this metric that excludes from the data all selling done within an hour of first purchasing the coins. The advantage of doing this is that such short-term transactions are noise in the data and, thus, don’t have any significant implications on the market.

When the value of this indicator is greater than 1, it means the holders are selling coins at some profit right now. On the other hand, values below the threshold suggest the overall market realizes some loss at the moment.

Naturally, the aSOPR being exactly equal to 1 implies that the investors are just breaking even on their current selling. Now, here is a chart that shows the trend in the Bitcoin aSOPR, as well as its 50-day and 100-day exponential moving averages (EMAs) during the 2014-2015 and 2018-2019 bear markets:

The trends in the metric during the previous bear market bottoms | Source: CryptoQuant

As shown in the above graph, the quant marked the relevant zones for the indicator in the previous two cycles. It looks like the aSOPR hit bottom values below one and then caught an overall uptrend as the price of Bitcoin itself bottomed out in both cycles. The indicator hitting low levels under one like this suggests that the investors heavily capitulated then, which detoxed the market from weak hands and hence helped the price finally bottom out.

Also, in both these bear markets, the 100-day EMA declined to the same lowest level (as represented by the lower dotted line in the chart) and rebounded back from it as this bottoming process took place. It also seems like a return to a bullish trend started with a golden cross of the two EMAs, with the 50-day crossing back above the 100-day.

Now, here is a chart that displays how the aSOPR and its EMAs are looking in the current cycle so far:

The value of the metric seems to have been climbing recently | Source: CryptoQuant

The chart shows that the same pattern of the Bitcoin aSOPR forming a bottom and then catching an overall uptrend has already appeared for the current cycle. The two EMAs are also looking on track to complete the golden cross soon.

However, the analyst has pointed out that the 100-day EMA is yet to touch the dotted level in this cycle. The period spent so far in the recovery of the metric (the uptrend from the bottom) has also been only about half of what previous cycles saw (the yellow bars).

Based on this, the quant believes there could still be one more drop in the price left, before these conditions are fulfilled and the real bottom is in.

BTC Price

At the time of writing, Bitcoin is trading around $17,200, up 3% in the last week.

Looks like BTC has sharply surged | Source: BTCUSD on TradingView

Featured image from Dmitry Demidko on 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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