On-chain data shows the Bitcoin SOPR hasn’t yet reached high levels that have been associated with heated bull market phases in the past.

In a CryptoQuant Quicktake post, an analyst has explained how market psychology has driven the BTC price during the past few years. The on-chain indicator that best represents the Bitcoin trader psychology according to the quant is the “Spent Output Profit Ratio” (SOPR).

The SOPR basically tells us about whether the BTC investors are selling their coins (or more precisely, transferring them on the blockchain) at a net amount of profit or loss.

When the indicator has a value greater than 1, it means that the average holder in the sector is selling their coins at some profit right now. On the other hand, a value under this threshold implies that loss-selling is dominant among the participants.

Naturally, when the SOPR has a value exactly equal to 1, the overall market can be assumed to be just breaking even on their selling, as the number of profits being realized is exactly canceling out the losses.

Now, here is a chart that shows the trend in the Bitcoin SOPR over the past few years:

In the above graph, the analyst has marked the pattern that the Bitcoin SOPR has followed in recent years. During the 2018 bear market, the BTC SOPR dropped to pretty low values below 1 following the November 2018 crash. Coinciding with these lows in the metric, the price also found its bottom.

In the 2022 bear market, the BTC investors were keeping still in the red as they participated in only a relatively low amount of loss selling until the FTX crash occurred and the holders finally capitulated to a significant degree.

So far, it would appear that the low after the FTX collapse was indeed the bottom for the current cycle, as BTC has only gone and doubled in value since then. The pattern of this bottom has also been consistent with the one of the 2018 bear market.

In between these two major bottoms, there was also a large-scale capitulation event back in 2020, but this crash was mostly an anomaly caused by the unexpected emergence of the COVID-19 pandemic.

From the chart, it’s visible that the trend during rallies has generally been just the opposite: investors start selling at large profits and once the profit-taking attains extreme levels, the top is hit.

Earlier this year, the BTC SOPR spiked to high levels around when BTC hit its local top in April. Since then, though, the indicator has remained relatively calm, with some mild profit-taking coming after the latest leg in the rally.

“There will be many corrections and declines in the current market until it reaches the peak of the bull market, but from a psychological perspective, there still seems to be enough time left until the latter half of the bull market,” thinks the quant.

Bitcoin had registered a decline below the $37,000 level during the past day, but the asset has pulled itself back up since then as it’s just floating above the mark now.

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