Shakeout Or Top? Here’s What Bitcoin SOPR Says About It

Keshav Verma

3 years 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.

Bitcoin price has now declined to $56k; does that mean a top is in? Or is this just a shakeout? Here’s what the SOPR indicator says about it.

The Bitcoin SOPR Indicator

The BTC Spent Output Profit Ratio (or SOPR in short) is an on-chain indicator that estimates whether investors are selling at a profit or a loss.

When the metric’s value is above one, it means coins that were moved during the period were sold, on an average, at a profit.

While SOPR values less than one imply the overall market has been selling at a loss during the particular timescale.

If the indicator starts trending up, it could mean holders are now realizing their profits and a correction could soon be coming.

On the other hand, a downwards trend implies sellers are moving their coins at a loss, and holders with profitable coins may be sitting on to them in hopes of further price appreciation.

What Does The Indicator Tell Us About Tops And Shakeouts?

An analyst has created a chart in a CryptoQuant post that highlights the trend in the value of the indictor over the past year and a half.

The trend of the SOPR during the early 2021 run versus now | Source: CryptoQuant

As you can see, above are the graphs for a few different versions of the indicator. The STH SOPR and LTH SOPR metrics show whether short-term and long-term holders, respectively, are taking profits or not.

The separation between the two types of holders is done on the basis of coin age. Coins that haven’t been moved since 155 days fall into the LTH category. Anything below that is in the STH territory.

Now, looking at the above chart, it seems like all the Bitcoin SOPR metrics had high values when the early 2021 top formed.

But before the run started, there was a period where the STH SOPR shot up and the other indicators also increased in value. However, there was no top formation here as it was only a pre-bull run shakeout.

A trend similar to that seems to be visible in the current time period. The STH SOPR is high right now, but long-term holders don’t seem to be realizing that much profits.

This fact makes the analyst believe that the latest decline in Bitcoin’s price was possibly just a shakeout, and not a top formation.

Here is a chart that shows the current trend in BTC’s price:

BTC's price continues to plunge down | 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.

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.