SOPR divergence occurs when the Spent Output Profit Ratio (SOPR), an on-chain metric indicating whether market participants are selling at a profit or loss, moves in a direction contrary to the asset’s price action. For example, if SOPR trends downwards while price increases, it suggests that profits are decreasing despite rising prices, potentially signaling market weakness. This divergence can serve as a warning sign for potential market reversals. It provides insight into investor sentiment.
Context
Crypto analysts often highlight SOPR divergence in news reports to signal potential shifts in market momentum or to caution investors about unsustainable price trends. Observing this metric helps gauge whether profit-taking pressure is building or if losses are being realized despite upward price movements. It offers a deeper understanding of underlying market participant behavior.
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