Bitcoin (BTC) sellers are currently facing their biggest losses since March 2020, according to an on-chain metric.
Data from Glassnode, an on-chain analytics firm, shows that Bitcoin’s spent output profit ratio (SOPR) has dropped to its lowest level in two years.
Increasing BTC On-Chain Losses
Bitcoin holders transferring funds from exchanges to non-custodial wallets are experiencing significant losses, reaching multi-year highs.
SOPR calculates the realized value of spent coins divided by their creation value. In simple terms, it’s the “price sold / price paid” ratio, as explained by Glassnode.
As per a report from Cointelegraph, SOPR typically fluctuates around 1, remaining below this level during bear markets and above it in bull markets.
During bear markets, unrealized losses rise, resulting in larger realized losses when coins are eventually sold. Thus, the end of bear markets tends to witness a decrease in SOPR. As of Nov. 14, the 7-day moving average of the metric stood at 0.9847 – the lowest since the March 2020 COVID-19 market crash.
SOPR also provides insights into BTC price movements. If BTC/USD sees an uptrend, hodlers may opt to sell at or slightly above the purchase price to avoid losses. This flood of supply, coupled with a lack of buyers, could then push prices downward.
SOPR serves as a valuable tool for predicting potential price trends, with 1 serving as a crucial threshold indicating a shift from hodlers to sellers.
The creator of the metric, Renatio Shirakashi, noted in 2019 that SOPR’s fundamental metrics make it influential in price changes compared to other lagging indicators.
In March 2020, SOPR briefly dropped to 0.9486, although it did not plummet as low as at the end of the 2018 bear market, registering a score of 0.9416.
4 Million Wallets Now Hold at Least 0.1 BTC
Moreover, even at a small scale, there has been a surge in “buying the dip.”
Recent data from Glassnode reveals that the number of wallets holding a minimum of 0.1 BTC ($1,700) has exceeded 4 million.
This trend has been steadily increasing throughout the year but gained momentum when BTC/USD dropped due to the FTX scandal.
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