cryptoslate.com
The Adjusted Spent Output Profit Ratio (aSOPR), a metric that indicates whether holders are selling at a profit or loss, recorded a downward trajectory below the 1-level, which suggests investors are selling their positions at massive losses.
According to CryptoSlate analysis, the aSOPR provided by Glassnode usually signals the transition to a bull market when investors realize high losses during the bear market. Holders give up with current conditions at this point, and the capitulation deepens. Therefore ushering buy-the-dip opportunists, who are driving substantial accumulation, despite the $BTC market witnessing one of the most significant capitulation events in 4 years.
As depicted in the graph below, the trend in Bitcoin’s aSOPR shows a recent downward trajectory below 1. As a result, the indicator’s value presently lies at a level last witnessed in 2018 when the bearish cycle reached its bottom.
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Fluctuating aSOPR levels suggest break-even traders, and the indicator trending upwards above 1 indicates profit-taking, which usually takes place before a bear market. For example, the $21K Bitcoin price level was an interesting zone for profit-taking in October, as was indicated by that time’s aSOPR.
However, further price declines in November amid the FTX crash saw holders continue on the trend of selling at a loss.
As the FTX insolvency continued ravaging the markets and adding more turmoil to an already one-year-long bearish cycle, holders continued to realize more losses hence adjusting the aSOPR to signal widespread $BTC capitulation.
Additionally, the aSOPR shifted to historical lows last seen before the 2018 bear market transitioned to bullish, which could signify the current cycle is approaching a bottom.
The only difference right now is the 2018 bottom featured lower lows compared to the current bottom. Therefore it is still uncertain whether the market has finally reached a transition point.