According to on-chain data shared by Glassnode, Bitcoin investors were trying to break even in almost every short-term price increase of BTC. Such behavior of investors is considered bearish, as it is one of the main reasons behind the lack of upward movement for Bitcoin.
The SOPR indicator, or the Spent Output Profit Ratio, is calculated by dividing the realized value by the value at creation of a spent output. Simply put, it divides the price sold by the price paid.
#Bitcoin aSOPR continues to face heavy resistance at the break-even threshold of 1.0.— glassnode (@glassnode) August 25, 2022
This suggest $BTC investors are taking profits during bear market rallies, and are spending coins at their cost-basis to simply 'get their money back'.
Live Chart: https://t.co/5weEX0MbyA pic.twitter.com/e6IgX5CwMR
Traders sell their holdings at profit if the SOPR value is greater than 1 and at a loss when the indicator shows values below 1. The aSOPR version of the indicator ignores all outputs with a lifespan of less than one hour, which allows analysts to see more accurate data that reflects sentiment among investors better than the regular version of the on-chain indicator.
The current spending behavior shows that investors are desperately trying to break even on their position as soon as BTC shows a mild recovery on the market. This fact shows us how little faith most market participants have in Bitcoin, as they are trying to exit from it at the very first opportunity.
For now, Bitcoin is not giving any chances to mid- or long-term investors to exit without a loss as SOPR is steadily moving below 1. The most recent price recovery was not enough to cover the selling pressure provided by midterm investors as there was no spike in sell orders on 6- to 12-month-old wallets.
At press time, Bitcoin is trading at $21,175, with a 2% price decrease in the last 24 hours.