Bitcoin (BTC) on-Chain Analysis: SOPR Reaches Capitulation Levels

Be[In]Crypto takes a look at Bitcoin (BTC) on-chain indicators, specifically the Spent Output Profit Ratio (SOPR) and the RHODL Ratio.

BTC SOPR

SOPR is an on-chain indicator that depicts whether if the market is in a state of profit or loss. Readings above one (black line) show that the market is in aggregate profit, while those below one show aggregate loss. 

The defining characteristic of bullish trends is that SOPR bounces at the one line instead of falling below it.

SOPR broke down below one (red circle) on Jan 20 2018, indicating that the preceding bullish trend had ended.  Afterward, the bottom was reached on Decn 11 of the same year, at a reading of 0.86. The bottom was reached 11 months after SOPR first broke down below one.

In the current bull run, SOPR broke down below one in May 2021. On June 18, it reached a value of 0.928. This is the third ever lowest value, being only higher than those on Dec 2018 and March 2020. Additionally, the low was reached 13 months after SOPR first broke down below one. 

So, while capitulation has not been as bad as that in 2018, it has taken longer to transpire.

RHODL Ratio

The RHODL ratio is an indicator created by taking the ratio between the one-week and the one-to two-year HODL Wave bands. Readings above 50,000 (highlighted in red) suggest that a considerable percentage of the BTC supply is in the hands of short-term holders.

This reading is generally associated with tops, as was the case for the 2013 and 2017 peaks. However, it was not the case in the 2021 top, which was made at about 14,000. 

The RHODL ratio is currently at 449, which is slightly above the 300 ratio that is considered oversold. Previous bottoms (black circles) have been reached inside this ratio. It is worth mentioning that this has not always been the case, since the March 2020 bottom was reached at a ratio of 1,100 (red circle).

A possibility is that the RHODL bottoms seem to have been following an ascending support line, since the 2019 bottom was higher than the 2015 one. This means that long-term holders hold less and less of the supply during bottoms as BTC matures. 

Going by this reading, the BTC price has reached or is very close to reaching a bottom.

For Be[in]Crypto’s latest bitcoin (BTC) analysis, click here