On-chain data shows that the Bitcoin profit-loss crossover aSOPR continued to act as a resistance to the price of the crypto.
Bitcoin aSOPR bounces off the exit line
As pointed out by an analyst in a CryptoQuant publication, the aSOPR value equal to the ‘1’ line has been acting as resistance for about 185 days.
The “Spent Profit Ratio” (or SOPR for short) is an indicator that tells us whether the average Bitcoin investor is currently selling at a profit or a loss.
When the value of this metric is greater than 1, it means that holders as a whole are moving their coins with some profit at the moment.
On the other hand, the price of the indicator that is less than the signal indicates that the overall market is in loss at the moment.
Of course, SOPR values exactly equal to 1 indicate that the average holder is simply outperforming their investment.
A modified version of the metric is the “Adjusted SOPR” (aSOPR), which excludes from the data the trades of all those currencies that were moved again within a single hour of their last move.
Now, here is a chart showing the trend in Bitcoin aSOPR over the past two 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 volume from the post has highlighted the relevant trend bands for Bitcoin aSOPR.
During historical bear periods, the indicator always found strong resistance at the crossover between the profit and loss areas, and thus remained locked below the 1 level.
And in the current bear market, the metric remains below one. He has made several attempts to enter the profit zone, but so far has been rejected each time.
The reason behind this is that aSOPR reaching a value of 1 indicates that investors, who were previously at a loss, are now selling at the same price they were at. Therefore, a large number of investors usually dump at this point, providing resistance to the price.
In the past, proper breaks above the profit-loss crossover signaled the start of a new bull rally. Since Bitcoin aSOPR is still trapped in the loss zone, it is safe to assume that the market has yet to see this bear.
At the time of writing, the price of Bitcoin is hovering around $18.8k, down 5% in the past week.
BTC has been moving sideways | Source: BTCUSD on TradingView
Featured image from Marco Pagano on Unsplash.com, charts from TradingView.com, CryptoQuant.com