Bitcoin Market At Decision Point: aSOPR Retests Crucial Level
April 25 2023 - 1:00PM
NEWSBTC
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. Related
Reading: Bitcoin ‘ESR’ Continues To Show Bullish Divergence, Will
Price Follow? 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. Related Reading: What’s Behind The Recent Bitcoin Drop?
Here’s What On-Chain Data Says 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
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