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. At this point, holders give up with current conditions and the capitulation deepens. Therefore ushering buy-the-dip opportunists, who are driving strong accumulation, despite the BTC market witnessing one of the largest capitulation events in 4 years.
As depicted in the graph below, the trend in Bitcoin’s aSOPR shows a recent downward trajectory below 1. The indicator’s value presently lies at a level last witnessed in 2018 when the bearish cycle reached its bottom.
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. 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 be a sign of the current cycle 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 point of transition.