SOPR (Spent Output Profit Ratio)

The SOPR (Spent Output Profit Ratio) indicator provides insight into macro market sentiment, profitability and losses taken over a particular time-frame. It reflects the degree of realised profit for all coins moved on-chain.

https://academy.glassnode.com/indicators/sopr/sopr-spent-output-profit-ratio

• SOPR values greater than 1 implies that the coins moved that day are, on average, selling at a profit (price sold is greater than the price paid).

• SOPR value less than 1 implies that the coins moved that day are, on average, selling at a loss (price sold is less than the price paid).

• SOPR value of exactly 1 implies that the coins moved that day are, on average, selling coins at break even.

• SOPR trending higher implies profits are being realised with potential for previously illiquid supply being returned to liquid circulation

• SOPR trending lower implies losses are being realised and/or profitable coins are not being spent.

SOPR is a useful tool in all market conditions as it captures the aggregate profit and loss realised on a particular day This can often be considered a reflection of market sentiment. Both the absolute value of the indicator and the prevailing trend provides insight market spending behaviour.

aSOPR (Adjusted SOPR)

The adjusted SOPR has a similar construction and interpretation to the standard SOPR metric, however excludes all transaction volume for coins with a lifespan younger than 1hr.

Adjusted SOPR (aSOPR) filters out all UTXOs with a lifespan of less than an hour, thereby eliminating obvious relay transactions. This in turn, this provides a more accurate signal of actual sale/purchase transactions, and better captures economically meaningful activity.

The SOPR metric is sensitive to the aggregate profit and loss realised by UTXOs spent on-chain. In the Spent Output Age Bands chart below, we filter to show only spent coins with a lifespan less than 1hr. This demonstrates that coins with <1hr lifespans consistently represent between 20% and 40% of daily network traffic. Given their short lifespan, these coins generally do not realise significant profit, nor loss, however do dilute the aggregate profit and loss.

LTH-SOPR

Long-Term Holder SOPR (LTH-SOPR) is a variant of SOPR that takes into account only spent outputs older than 155 days. As such, LTH-SOPR serves as an indicator for assessing the behaviour and profitability of smart-money investors who have greater fundamental understanding of the asset and more experience in market volatility.

Over the course of 155-days (LTH threshold), it is common for market volatility and price to resolve in a direction, either above, or below the price when the UTXO was created (assumed cost basis). As a result, when a coin held by a LTH is spent, it tends to realise a sizeable profit or loss. Unlike the standard SOPR metric and variants (aSOPR and STH-SOPR), which typically oscillate around a value of 1.0, the LTH-SOPR often reaches relatively large (> 2.0) and small values (<0.8).

• High LTH-SOPR Values indicate that on aggregate, LTHs are realising high profit multiples on spent coins. A LTH-SOPR value of 4.0 can generally be interpreted as LTHs realising an aggregate average profit of 300% (4.0 - 1.0 = 3.0) that day.

• Low LTH-SOPR Values indicate that on aggregate, LTHs are realising losses on spent coins, which is typical only in bear markets. A LTH-SOPR value of 0.6 can be interpreted as LTHs realising an aggregate loss of 40% (0.6 - 1.0 = -0.4) that day.

  LTH-SOPR can provide macro cyclical top and bottom signals as demonstrated in the chart below. Macro tops have historically been reached when LTH-SOPR values >10 are achieved, indicating profits of 900%+ are being realised by LTHs. Macro bottoms have historically been established where LTHs are realising significant losses with LTH-SOPR reaching 0.6 and below (losses of 40% or more).

SOPR (Spent Output Profit Ratio)

The SOPR (Spent Output Profit Ratio) indicator provides insight into macro market sentiment, profitability and losses taken over a particular time-frame. It reflects the degree of realised profit for all coins moved on-chain.

https://academy.glassnode.com/indicators/sopr/sopr-spent-output-profit-ratio

• SOPR values greater than 1 implies that the coins moved that day are, on average, selling at a profit (price sold is greater than the price paid).

• SOPR value less than 1 implies that the coins moved that day are, on average, selling at a loss (price sold is less than the price paid).

• SOPR value of exactly 1 implies that the coins moved that day are, on average, selling coins at break even.

• SOPR trending higher implies profits are being realised with potential for previously illiquid supply being returned to liquid circulation

• SOPR trending lower implies losses are being realised and/or profitable coins are not being spent.

SOPR is a useful tool in all market conditions as it captures the aggregate profit and loss realised on a particular day This can often be considered a reflection of market sentiment. Both the absolute value of the indicator and the prevailing trend provides insight market spending behaviour.

aSOPR (Adjusted SOPR)

The adjusted SOPR has a similar construction and interpretation to the standard SOPR metric, however excludes all transaction volume for coins with a lifespan younger than 1hr.

Adjusted SOPR (aSOPR) filters out all UTXOs with a lifespan of less than an hour, thereby eliminating obvious relay transactions. This in turn, this provides a more accurate signal of actual sale/purchase transactions, and better captures economically meaningful activity.

The SOPR metric is sensitive to the aggregate profit and loss realised by UTXOs spent on-chain. In the Spent Output Age Bands chart below, we filter to show only spent coins with a lifespan less than 1hr. This demonstrates that coins with <1hr lifespans consistently represent between 20% and 40% of daily network traffic. Given their short lifespan, these coins generally do not realise significant profit, nor loss, however do dilute the aggregate profit and loss.

LTH-SOPR

Long-Term Holder SOPR (LTH-SOPR) is a variant of SOPR that takes into account only spent outputs older than 155 days. As such, LTH-SOPR serves as an indicator for assessing the behaviour and profitability of smart-money investors who have greater fundamental understanding of the asset and more experience in market volatility.

Over the course of 155-days (LTH threshold), it is common for market volatility and price to resolve in a direction, either above, or below the price when the UTXO was created (assumed cost basis). As a result, when a coin held by a LTH is spent, it tends to realise a sizeable profit or loss. Unlike the standard SOPR metric and variants (aSOPR and STH-SOPR), which typically oscillate around a value of 1.0, the LTH-SOPR often reaches relatively large (> 2.0) and small values (<0.8).

• High LTH-SOPR Values indicate that on aggregate, LTHs are realising high profit multiples on spent coins. A LTH-SOPR value of 4.0 can generally be interpreted as LTHs realising an aggregate average profit of 300% (4.0 - 1.0 = 3.0) that day.

• Low LTH-SOPR Values indicate that on aggregate, LTHs are realising losses on spent coins, which is typical only in bear markets. A LTH-SOPR value of 0.6 can be interpreted as LTHs realising an aggregate loss of 40% (0.6 - 1.0 = -0.4) that day.

  LTH-SOPR can provide macro cyclical top and bottom signals as demonstrated in the chart below. Macro tops have historically been reached when LTH-SOPR values >10 are achieved, indicating profits of 900%+ are being realised by LTHs. Macro bottoms have historically been established where LTHs are realising significant losses with LTH-SOPR reaching 0.6 and below (losses of 40% or more).