Is Bitcoin's Price Peak Still Ahead? Insights from aSOPR Data

Bitcoin has faced a significant downturn recently. However, a key market indicator suggests that the price may not have reached its peak in this cycle yet. What insights does the Adjusted Spent Output Profit Ratio (aSOPR) provide?

Key Takeaways

The Bitcoin Adjusted SOPR (aSOPR) has been in a consolidation phase for almost two years.
The aSOPR indicates whether Bitcoin investors are selling at a profit or loss, with values above 1 signaling profit and below 1 signaling loss.
Current trends show that the aSOPR has not yet hit historical peak levels, suggesting there could still be potential for Bitcoin to rise further.
Bitcoin's price is currently around $86,300, reflecting a 9% decline over the past week.

Bitcoin

Understanding Bitcoin's aSOPR and Its Implications

As highlighted in an analysis by a CryptoQuant expert, the Bitcoin aSOPR has shown a consolidating pattern within converging trendlines for nearly two years. The Spent Output Profit Ratio (SOPR) serves as a crucial marker, revealing whether Bitcoin investors are selling their assets at a profit or a loss.

When the SOPR is above 1, it indicates that the average investor is gaining from their sales on the blockchain. Conversely, a value below 1 suggests that losses are predominant among sellers. If the SOPR is exactly equal to 1, it means that profits and losses are balancing out, and investors are essentially breaking even.

The focus here is the Adjusted SOPR (aSOPR), which refines the data by excluding transactions where coins have been sold within an hour of their previous movement. Such rapid transfers, often referred to as relay transactions, don’t significantly impact market dynamics.

The following chart illustrates the trend of Bitcoin's aSOPR over recent years:

Bitcoin aSOPR

As shown in the chart, the aSOPR hit key levels during the bull runs of 2017 and the first half of 2021, peaking at a notable profit-taking point marked by a red line. Similarly, bear markets in the past cycles found their lows at the corresponding green line, just under the 1 mark, suggesting that at this level, loss-taking activities predominated. This may indicate that weak hands are selling off while strong holders are accumulating more coins.

Currently, the aSOPR has not reached the red line but has remained in a consolidation phase within two converging trendlines for nearly two years in a region characterized by mild profit-taking.

Considering the patterns from the last two cycles, it’s plausible that the present cycle has yet to see its peak. Alternatively, it’s also possible that this time, the aSOPR may not reach the traditionally high levels seen in prior cycles.

The Bitcoin aSOPR is now gradually approaching the end of its converging channel, indicating that a breakout—whether upward or downward—may be imminent. The direction of this breakout remains to be seen.

Current Bitcoin Price

At the time of writing, Bitcoin is trading at approximately $86,300, marking a 9% drop over the past week.

Bitcoin Price Chart

The price trend for Bitcoin over the last five days is illustrated in the chart above.

This article provides a clearer understanding of the market dynamics surrounding Bitcoin and its profitability indicators like the aSOPR, valuable for both new and experienced investors in the cryptocurrency space.