Here’s what the historical pattern of an on-chain indicator suggests regarding whether the time to accumulate Bitcoin is over or not.
Bitcoin 150-Day MA aSOPR Currently Has A Value Of 1.01
As pointed out by an analyst in a CryptoQuant Quicktake post, the 150-day moving average (MA) of the Bitcoin aSOPR has a value of just 1.01 right now. The “Adjusted Spent Output Profit Ratio” (aSOPR) here refers to an indicator that basically tells us about whether the BTC investors are selling their coins at a profit or loss.
This metric works by going through the on-chain history of all tokens being sold/transferred to see what price they were transacted at prior to this. When this price for any coin is less than the current price at which they are now being sold, then that particular token’s sale could be assumed to be leading to profit realization.
Similarly, coins of the opposite type could be considered to be adding to the loss realization. The aSOPR combines such profits and losses being realized across the network, and calculates their ratio.
The “adjusted” in this metric’s name comes from the fact that it filters out transactions of coins that were moved inside an hour of their last transaction. Transfers like these are generally of no consequence to the wider market, so it makes sense to take them out of the data.
Now, here is a chart that shows the trend in the 150-day MA of the Bitcoin aSOPR over the last few years:
As displayed in the above graph, the 150-day MA Bitcoin aSOPR has consistently remained above the 1 mark this year, which implies the investors as a whole have been realizing more profits than losses.
Earlier in the year, the indicator had grown to a high of 1.04 as the investors had taken the profits of the rally. As the consolidation of the cryptocurrency has dragged on, though, the metric has declined, with its value now sitting at 1.01.
In the chart, the quant has highlighted two zones that have historically been significant for the aSOPR. The first is the region under 0.98, where bottoms have historically occurred. At levels this low, the investors are participating in notable loss realization. Resolute hands pick up the coins from these capitulators, thus helping the price reach a point of turnaround.
The other zone is the one above 1.08, where tops have formed in the past as a result of the aggressive profit-taking from the whales. So far, the current cycle hasn’t seen the Bitcoin aSOPR visit this territory.
“Based on previous trends, accumulating Bitcoin until aSOPR reaches 1.04 could be a solid strategy for long-term gains,” says the analyst. “Timing the market by observing whale behavior may prove fruitful.”
BTC Price
Bitcoin had plunged to the $65,000 level yesterday, but the coin has already made recovery as its price is now floating around $67,100.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com