Bitcoin SOPR hits its lowest since March 2020, bringing losses to a real level

Key points: 

• Bitcoin’s Issue Revenue Profit Ratio (SOPR) has now fallen to a two-year low.
• SOPR divides the realized value of an issued coin by its value at creation. Numbers below 1 are signals of the bear market and above of the bear market. 
• As of Nov. 14, its seven-day moving average was at 0.9847. 
• With BTC raising in price, traders are selling slightly above or at the cost to avoid losses. This leads to an oversupply that pushes prices down again with no buyers.
• Meanwhile, those who care about "buying the dip" are doing so on even the smallest level.

An on-chain metric shows bitcoin sellers are suffering their biggest overall losses since March 2020.

Data from on-chain analytics firm Glassnode confirms that Bitcoin’s Issue Revenue Profit Ratio (SOPR) has now fallen to a two-year low.

BTC on-chain losses are rising

While bitcoin holders attempted to move funds from exchanges to non-custodial wallets, those who moved bitcoin did so while losing money for years.

SOPR divides the realized value of an issued coin by its value at creation. In other words, as Glassnode sums it up, "Sell/Pay Price".

As reported, SOPR fluctuates around 1 and tends to fall below that level during Bitcoin bear markets and above it during bull markets.

This is logical since unrealized losses increase during bear markets, leading to relatively large total realized losses once tokens are sold.

As such, the end of bear markets tends to see lower SOPR. As of Nov. 14, the metric’s seven-day moving average was at 0.9847 — its lowest since the March 2020 COVID-19 cross-market crash.

SOPR has other effects on BTC price action.

If BTC/USD starts to rise, traders have the incentive to sell at or slightly above cost to avoid losses. This leads to an oversupply that logically pushes prices down again with no buyers.

As such, SOPR can serve as a useful predictive tool for potential price developments, and once again, 1 is an important wrench when it comes to reaching sellers.

“Because of the fundamental nature of the underlying indicators that SOPR relies on upon, it is fair to speculate that spending output margins affect price changes,” the indicator’s creator, Renatio Shirakashi, explained in a 2019 introduction:

“This can be of considerable significance, since most current indicators are lagging indicators.”

In March 2020, SOPR briefly fell to 0.9486, still below the 0.9416 reached at the end of the 2018 bear market.

4 million wallets now hold at least 0.1 bitcoin

Meanwhile, those who care about "buying the dip" are doing so on even the smallest level.

Additional data from Glassnode shows that the number of wallets holding at least 0.1 BTC (about $1,700 at the time of writing) has now surpassed 4 million.

While the trend has been rising almost all the time this year, it accelerated significantly when BTC/USD fell due to the FTX scandal.