Imagine a neighborhood garage sale where everyone keeps a detailed ledger of what they originally paid for each item they’re selling.

If most sellers are pricing items higher than what they paid, the neighborhood is experiencing a “profit sale.” If prices are lower than original costs, it’s a “loss sale.”

SOPR Analogy using Garage Sale

This is exactly what SOPR does for Bitcoin transactions. It tracks whether coins moving on the blockchain are being transferred at a profit or loss compared to when they were acquired.

📖 What is SOPR?

SOPR is a metric that tells us whether BTC holders are selling at a profit or a loss based on the price they originally acquired their coins.

SOPR = Price sold / Price paid​

SOPR looks at each bitcoin that is moved (spent) on the blockchain and checks:

  1. What was the price when it was originally acquired?
  2. What is the price now when it is being spent?

It then tells us: Are people moving/selling their coins at a profit or a loss compared to when they got them?

In a nutshell, this metric tracks all bitcoins that move during a specific timeframe and analyzes their profitability status.

While SOPR assumes that moved coins are being sold, this isn’t always true. Sometimes, owners simply transfer coins between their own wallets.

Despite this limitation, SOPR provides a reasonable estimate of whether the overall market is selling at a profit or loss.

SOPR was developed by Renato Shirakashi.

Example

  • Imagine you bought 1 BTC at $30,000, and now you sell it when the price is $36,000. Your SOPR for this transaction is $36,000 ÷ $30,000 = 1.2 (a 20% profit).
  • If many BTC transactions in a day have SOPR > 1, the market is generally taking profits. If SOPR < 1, many are selling at a loss.

🔍 How to Read the Chart

Bitcoin: Spent Output Profit Ratio (SOPR)

This chart titled “Bitcoin: Spent Output Profit Ratio (SOPR)” shows how profitable or unprofitable Bitcoin transactions are at the time coins are moved (spent), and ties that to BTC price action.

📊 Chart Components

  • 🟩 Green/🟥 Red Bars: SOPR (Spent Output Profit Ratio)
    • Green = profits (SOPR > 0)
    • Red = losses (SOPR < 0)
  • ⚫ Black Line: BTC/USD Spot Price

📈 Interpreting the Chart

  • SOPR > 1 (green) → Coins sold at a profit.
  • SOPR < 1 (red) → Coins sold at a loss.
  • SOPR ~ 1 → Coins are breaking even (current price = acquisition price).

Observations:

  • During bull runs, SOPR mostly stays green → holders are taking profit.
  • In bear markets, SOPR dips red → widespread losses, panic selling.
  • Deep red SOPR spikes (especially in 2018, 2020, 2022, and early 2023) often signal capitulation bottoms.
  • Sustained SOPR > 1 during 2021 and 2024 coincides with strong uptrends in BTC price.

In the shown chart:

  • SOPR is generally positive → The majority of spent coins are in profit.
  • No extreme red spikes recently, suggesting no major capitulation.
  • Indicates bull market structure is intact, with healthy profit-taking.

🧠 Why Traders Care

Trend Analysis:

  • Rising SOPR: Indicates more profits are being realized, possibly signaling market optimism or the return of previously illiquid coins into circulation.
  • Falling SOPR: Indicates more losses are being realized, or that profitable coins are not being spent, which can signal fear or capitulation.

Support/Resistance:

  • The SOPR value of 1 often acts as a psychological support or resistance level.
  • In bull markets, SOPR tends to bounce off 1, while in bear markets, it may remain below 1 for extended periods

Other Tips:

  • SOPR reset to 1 after dips often acts as a bullish continuation signal (support line for uptrends).
  • Repeated SOPR < 1 can signal bearish conditions or consolidation under stress.
  • Extreme negative SOPR spikes are sometimes interpreted as max pain + local bottom.

📜 Historical Examples

Here are some notable historical examples illustrating how the Spent Output Profit Ratio (SOPR) has provided insights into Bitcoin market dynamics:

November 2022: FTX Collapse and Market Capitulation

  • In November 2022, the collapse of the FTX exchange led to a significant drop in bitcoin’s price to around $16,000.
  • During this period, the SOPR metric fell sharply from 0.99 to 0.87, indicating that many investors were selling their holdings at a loss.
  • This behavior reflected widespread panic and capitulation in the market. Subsequently, Bitcoin’s price began to recover, climbing back above $20,000 in the following weeks.

March 2021: Profit-Taking Near Market Peaks

  • In March 2021, as bitcoin’s price approached its then all-time high of approximately $61,000, the SOPR metric rose above 1.15.
  • This elevated SOPR value signaled that a significant portion of the market was realizing profits, which often precedes a price correction.
  • Indeed, shortly after, bitcoin experienced a pullback, highlighting SOPR’s utility in identifying potential market tops.

July 2021: SOPR Reset and Bullish Continuation

  • After a correction in May 2021, bitcoin’s price stabilized around $30,000. During July, the SOPR metric dipped below 1, suggesting that investors were selling at a loss.
  • This “SOPR reset” often indicates a market bottom, as weaker hands exit and stronger hands accumulate.
  • Following this period, bitcoin’s price resumed its upward trajectory, reaching new highs later in the year.

🤓 Extra Credit: What Are “Spent Outputs”?

  • In Bitcoin, coins don’t exist as individual, numbered pieces. Instead, Bitcoin keeps track of “outputs” from transactions.
  • Each time someone receives bitcoin, they actually receive a new transaction “output” which is a chunk of value assigned to their wallet address.
  • When someone sends bitcoin, the “output” they received from a previous transaction is spent, and a new output is created for the recipient.

Example:

  • Lisa receives 1 BTC from Jennie. That 1 BTC is an “unspent output.”
  • When Lisa sends 1 BTC to Rosé, that output is now spent, and new outputs are created for Rosé.

🟠 Summary Table

SOPR is an on-chain metric that provides a real-time pulse on whether bitcoin holders are cashing out with gains or cutting losses. Watching changes in SOPR can help you spot phases of profit-taking, market exhaustion, and potential reversal points.

SOPR Value Interpretation Signal
> 1.0 Selling at a profit Bullish continuation likely
= 1.0 Break-even selling Neutral / trend test
< 1.0 Selling at a loss Capitulation or bearish signal
Sharp dips Forced selling or panic Possible local bottom