New On-chain Metrics in The Onramp Terminal
Analyzing new on-chain metrics in the Onramp Bitcoin Terminal
You can read the full report here.
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Analyzing new on-chain metrics in the Onramp Bitcoin Terminal
Mt. Gox bankruptcy trustee begins distributing coins to creditors
Onramp Bitcoin Terminal
The Onramp Bitcoin Terminal is your one-stop shop for bitcoin fundamentals, on-chain research, and real-time aggregated trending news topics from around the industry.
Onramp recently rolled out 20 new on-chain metrics for investors to reference and utilize in their investment process. Today we're going to look at a few and analyze what they tell us about the current market environ-ment.
Spent Output Profit Ratio (SOPR)
Spent Output Profit Ratio (SOPR) measures the fiat value comparison between bitcoins currently being moved on-chain, or "spent," and when they were last moved. Said otherwise, SOPR measures the ratio of the price sold / price paid.
Since a large volume of buying and selling takes place on exchanges, and also sometimes users will transfer bitcoins to themselves, SOPR is not a perfect measure of buyer and seller economic activity taking place on the Bitcoin network. However, it is directionally correct and has been a useful indicator of market tops and bottoms.
Market tops have coincided with the monthly SOPR peaking above 1.2, meaning that coins being moved on-chain are on average 20% more valuable, in fiat terms, than the last time they were moved. Said otherwise, spenders were 20% in profit on the coins they were spending. This is indicative of long-term holders taking profits and distributing coins at cycle highs.
On the flip side, bear markets have typically bottomed with the monthly SOPR falling to 0.91, meaning that spenders were capitulating and taking a 9% loss on average.
The top chart above shows the monthly SOPR over bitcoin's history, and illustrates SOPR's relationship with major cycle tops and bottoms.
The bottom chart shows a more granular view of the daily SOPR over the last year. It shows that we've been in a profitable distribution phase since October 2023 and that daily SOPR did indeed start registering above 1.2 in the March run-up to new all-time highs, although the March monthly SOPR was 1.16.
The 1-year chart also shows that daily dips below 1.0 have been reliable signals of investor capitulation and have market local bull-market bottoms. Since May, we have been oscillating in the 1.0 - 1.1 range, indicating that the bull market has yet to reach its euphoria phase where it typically registers several consecutive monthly SOPRs in the 1.15 - 1.20 range.
You can read the full report here.