On-chain data shows that the Bitcoin aSOPR metric is at an all-time low not seen since December 2018, indicating that holder capitulation is deepening.
Bitcoin aSOPR has fallen to its lowest level since almost 4 years ago
As one analyst noted in a post on CryptoCompare, the current capitulation is deeper than during both the 2015 bear and the COVID crash.
The “Expense 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.
When this metric has a value greater than 1, it means that the overall market is currently making some profit.
On the other hand, indicators with values below the threshold mean that the average holder is currently selling at a loss.
SOPR equal to 1 naturally suggests that investors are completely break even.
A modified version of this metric is the “adjusted SOPR” (aSOPR), which does not account for coins sold within 1 hour of purchasing those coins. As a result, the indicator filters out any noise from the data that has no significant impact on the market.
Now, here is a chart showing the trend in Bitcoin ASOPR since the year 2014:
The statistic seems to have dropped significantly in value in recent days. Source: CryptoQuant
As you can see in the chart above, bitcoin aSOPR has recently seen a rapid downward trajectory below the 1 level. This means that BTC investors are selling their coins at huge losses.
The value of the indicator is now the lowest since December 2018, when the previous cycle’s bear market bottomed out.
These current levels of the metric are also lower than the bear market lows of 2015 and during the COVID Black Swan crash.
The decline of ASOPR as of now indicates that a broad capitulation is taking place in the bitcoin market. Such deep loss realizations historically cause price drops because they result from changes in coins from weak hands to strong hands.
Since the indicator is currently at an all-time low, it is possible that the market is bottoming out for this cycle. However, it’s worth noting that the 2018 bottom showed even deeper prices than now, so it’s uncertain whether the current cycle will see similar lows before hitting the true bottom.
At the time of writing, bitcoin’s price is hovering around $16.5k, up 1% over the past week.
BTC has shown strong upward momentum over the past two days Source: BTCUSD on TradingView Featured image of 愚木混株 cdd20 on Unsplash.com Charts from TradingView.com, CryptoQuant.com