Bitcoin Market At Decision Point: aSOPR Retests Crucial Level

Keshav Verma

1 year ago

3 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

The Bitcoin market may be close to a decision point as on-chain data shows the Adjusted Spent Output Profit Ratio (aSOPR) is retesting the 1.0 level.

Bitcoin aSOPR Has Declined Towards A Value Of 1.0 Recently

According to the latest weekly report from Glassnode, the BTC market had shifted towards a profit-dominated regime back in January. The “aSOPR” is an indicator that tells us whether the average investor is selling their Bitcoin at a profit or at a loss currently.

The “adjusted” in aSOPR comes from the fact that this metric has been adjusted for filtering out transactions/sales of all coins that were done within only one hour of the previous transaction/purchase. The benefit of making this restriction is that it removes all noise from the data that wouldn’t have had any noticeable implications for the market.

When the value of this indicator is greater than 1.0, it means the total amount of profits being harvested by the investors is more than the losses right now. On the other hand, values of the metric below the threshold suggest the market as a whole is realizing some losses at the moment.

The 1.0 level itself naturally serves as the break-even mark, where the total amount of profits becomes equal to the losses.

Now, here is a chart that shows the trend in the Bitcoin aSOPR over the last few months:

The value of the metric seems to have been above the 1.0 mark in recent days | Source: Glassnode's The Week Onchain - Week 17, 2023

Historically, the aSOPR 1.0 level has been quite important for Bitcoin, as it has represented the mark where the transition between bullish and bearish trends has taken place.

During bear markets, the indicator generally stays under this level, as investors naturally realize large losses. The mark acts as resistance in such market conditions, meaning that any attempts to break above it usually end up in failure.

On the contrary, the 1.0 level acts as a support for the price during bullish periods, making sure that the indicator stays in the profits zone. Both these patterns can also be seen in action in the above graph, as the 2022 bear market saw the metric being stuck in the zone below 1.0, while the rally that started in January has observed it is in the green area.

There was an exception last month, however, when the Bitcoin aSOPR sharply plunged below the 1.0 mark due to a sharp plunge in the price. It wasn’t long, though, before the metric (and also the price) returned back toward the bullish trend, implying that it was only a temporary anomaly.

Recently, as the asset’s price has once again been going down, the indicator has also declined toward the 1.0 level. “With aSOPR currently retesting the break-even level of 1.0, this puts the market close to a decision point,” explains Glassnode.

It now remains to be seen whether the retest will be successful, and this level will act as support for the price, or if a break below will take place, possibly bringing with it more decline for the cryptocurrency.

BTC Price

At the time of writing, Bitcoin is trading around $27,300, down 10% in the last week.

BTC has seen some sharp decline recently | Source: BTCUSD on TradingView

Featured image from Maxim Hopman on Unsplash.com, charts from TradingView.com, Glassnode.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.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.