aSOPR hits lows, signaling Bitcoin bottom like in 2018

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Key points:

• Adjusted Spent Output Profit Ratio (aSOPR), is an indicator of whether holders are making a profit or losing money, indicating that investors are selling positions at a substantial loss.
• This is usually a signal for investors to transition to a bull market when they realize large losses in a bear market.
• The value of the indicator is currently at levels last observed in 2018, when the bearish cycle bottomed out.
• The only difference right now is that the 2018 bottom had a lower low compared to the current bottom. 

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The Adjusted Spent Output Profit Ratio (aSOPR), an indicator of whether holders are making a profit or losing money, is trending down, below a level of 1, indicating that investors are selling positions at a substantial loss.

According to analysis, the aSOPR provided by Glassnode is usually a signal for investors to transition to a bull market when they realize large losses in a bear market. Holders are giving up the current terms at this point, and the surrender deepens. So while the BTC market is witnessing one of the most significant capitulation events in 4 years, opportunists buying the dip are driving massive accumulations.

As shown in the chart below, the trend of Bitcoin aSOPR shows a recent downtrend below 1. As such, the value of the indicator is currently at levels last observed in 2018, when the bearish cycle bottomed out.

A volatile aSOPR reading indicates that traders are breaking even, and an indicator above 1 indicates profit-taking, which usually precedes a bear market. For example, the $21,000 Bitcoin price level in October was an interesting profit-taking zone, as shown by aSOPR at the time.

However, holders continued their trend of selling at a loss as the FTX crash led to further price drops in November.

As the FTX bankruptcy continues to ravage the market and further intensify the volatility of the year-long down cycle, holders continue to absorb losses, thus adjusting aSOPR to signal a broad BTC capitulation.

The only difference right now is that the 2018 bottom had a lower low compared to the current bottom. Whether the market has finally reached a turning point, therefore, remains uncertain.