Definition ∞ The SOPR Metric, or Spent Output Profit Ratio, is an on-chain indicator that assesses whether Bitcoin or Ethereum transactions are, on average, being spent in profit or loss. It is calculated by dividing the realized value (price at which an output is spent) by the acquisition value (price at which it was created). A SOPR value above one indicates that coins are being sold for a profit, while a value below one suggests sales at a loss. This metric provides insight into overall market sentiment and investor behavior.
Context ∞ The SOPR Metric is a key analytical tool frequently cited in cryptocurrency news to gauge market sentiment and identify potential market turning points. A SOPR value consistently below one can indicate investor capitulation, often preceding a market bottom. Conversely, a high SOPR might suggest overextension and potential for correction. The discussion often revolves around its predictive power for price movements, offering a unique perspective on the profitability of market participants.
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