On-chain data shows that the aSOPR metric of Bitcoin has fallen to a low not seen since December 2018, suggesting that holder capitulation is deepening.
Bitcoin aSOPR crashes to lows not seen in almost 4 years
As one analyst noted in a CryptoQuant post, the current capitulation is deeper than during the 2015 bear and COVID crash.
The Spent Output Profit Ratio (or SOPR for short) is an indicator that tells us whether Bitcoin investors are currently selling at a loss or at a profit.
If the value of this metric is greater than 1, it means that the overall market is currently making some profit.
On the other hand, the indicator with values below the threshold means that the average holder is currently selling at a loss.
Of course, the fact that the SOPR is exactly equal to 1 suggests that investors as a whole are just breaking even.
A modified version of this metric is the “Adjusted SOPR” (aSOPR) which does not take into account sales of coins made within 1 hour of the purchase of those coins. In this way, the indicator filters out any noise from the data that would not have had a significant impact on the market.
Now here is a chart showing the trend of Bitcoin aSOPR since 2014:
The value of the metric seems to have dropped sharply in the past few days | Source: CryptoQuant
As you can see in the chart above, the Bitcoin aSOPR recently witnessed a rapid move lower below the 1 level. This means BTC investors sold their coins at huge losses.
The indicator’s value is now the lowest since December 2018, when the bear market of the previous cycle bottomed out.
These current levels of the metric are also lower than they were during both the 2015 bear market bottom and the black swan COVID crash.
Drops in aSOPR like this one indicate that widespread capitulation is occurring in the bitcoin market. Such deep loss realizations have historically led to the formation of bottoms in price as they lead to a shift in coins from weak hands to strong hands.
With the indicator currently at historic lows, it is possible that the market is nearing a bottom for this cycle. However, it is worth noting that the bottom of 2018 was even lower than it is now, so it is uncertain whether the current cycle will make similar lows or not before the true bottom is reached.
At the time of writing, the price of Bitcoin is hovering around $16.5k, up 1% over the past week.
BTC has shown a strong uptrend for the past two days | Source: BTCUSD on TradingView Featured image from 愚木混株 cdd20 on Unsplash.com, Charts by TradingView.com, CryptoQuant.com
Source: Crypto News Deutsch