Definition ∞ The SOPR indicator is an on-chain metric that assesses whether market participants are selling Bitcoin at a profit or a loss. SOPR, or Spent Output Profit Ratio, is calculated by dividing the realized value of a spent transaction output by its value at creation. A SOPR value greater than one indicates that coins are being sold for a profit, while a value less than one suggests sales at a loss. This metric helps analysts gauge overall market sentiment and identify potential turning points in price trends. It provides insight into the profitability of recent transactions.
Context ∞ The SOPR indicator is widely referenced in cryptocurrency market analysis and news to understand the aggregate behavior of Bitcoin holders. Reports often highlight when SOPR crosses above or below one, suggesting shifts from capitulation to profit-taking, or vice versa. Observing sustained periods of SOPR above one can signal a healthy bull market, while drops below one might indicate periods of accumulation during market corrections.
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