SOPR: The Spent Output Profit Ratio

What is bitcoin's SOPR? The Spent Output Profit Ratio shows whether the bitcoin moved on the blockchain today is, on average, passed on at a profit or a loss. Above 1 means profit, below 1 loss. Renato Shirakashi introduced it in April 2019. SOPR is a gauge of the day's mood, not a valuation model: it tells you how holders are acting right now, not whether bitcoin is expensive.

Most on-chain metrics value the stock: what all bitcoin is worth against what its holders paid. That is the question behind the MVRV ratio. SOPR instead looks at the movement of a single day: whoever spends their coins today, are they making a profit or a loss?

What SOPR measures

Every bitcoin transaction spends old outputs and creates new ones. These outputs are called UTXOs, "unspent transaction outputs". Each UTXO has a creation date. How this looks in detail is shown in Bitcoin transactions explained.

When a UTXO is spent, two prices can be compared:

• the dollar value of the coins on the day they were created, roughly the cost basis,
• the dollar value of the same coins on the day they are spent.

Divide the second by the first, sum it up over all outputs spent in a day, and you get SOPR.

The example shows the weighting: SOPR counts in dollars, not per person. Large outputs count more than many small ones.

The line at 1: support and ceiling

Shirakashi's central observation concerned the value 1, the border between profit and loss.

In a rising market, few people want to sell at a loss. When the price falls so that SOPR drops towards 1, many prefer to hold on, and selling dries up. In rising markets SOPR therefore often bounced off 1, and the price kept climbing afterwards.

In a falling market, it is the other way round. Many bought higher and are waiting to get out without a loss. When the price rises so that SOPR reaches 1, they sell at their cost basis. The 1 becomes a ceiling.

That gives a simple reading: if SOPR stays above 1 after a correction, the uptrend is intact. If after a crash it fails to get above 1 for months, the market is still unwinding.

This is an observation, not a rule. There were phases when SOPR oscillated around 1 several times without any direction following.

aSOPR, STH-SOPR and LTH-SOPR

The original SOPR contains a lot of noise. Data providers such as Glassnode therefore introduced variants.

• aSOPR (adjusted SOPR) leaves out all UTXOs younger than one hour. These are mostly pass-throughs, such as change or forwarding between exchange wallets. They always have a SOPR near 1 and dilute the signal.
• STH-SOPR considers only coins younger than 155 days, the short-term holders. It reacts quickly and falls below 1 in almost every correction, because the latest buyers sell at a loss.
• LTH-SOPR considers only coins older than 155 days. Long-term holders almost always sell at a profit, often a big one. If LTH-SOPR falls below 1, even patient holders are giving up at a loss. That only happened in deep bear markets, for example in 2022.

The 155-day boundary is not a law of nature. Glassnode chose it because coins of that age are statistically much less likely to be spent. How coins are distributed across all age groups is shown by HODL Waves.

SOPR next to the Power Law zones

This site's valuation zones tell you where the price stands relative to its long-term trend, from Floor to Euphoria. They are a snapshot of the level. SOPR is a measurement of behaviour: it shows what holders do at that price.

Read together, they say more:

• Accumulation or Floor zone, LTH-SOPR below 1: the price is cheap relative to the trend, and even long-term holders are giving up. That is what the end of the 2022 bear market looked like; the low on 21 November 2022 was 1.4% below the floor.
• Fair zone, STH-SOPR dips briefly below 1 and turns back up: a normal correction in a rising market. The short-term buyers have been shaken out; the valuation is not extreme.
• Hot zone, LTH-SOPR very high: long-term holders are taking large profits. That is the distribution that was typical before tops.

Where the zones are today is shown on the Power Law page and here:

What SOPR cannot do

It says nothing about valuation. A SOPR of 1.1 can occur at $20’000 or at $120’000. It measures the sellers' gain, not whether the price is high.

It is dominated by large outputs. Because SOPR is weighted in dollars, a single old coin from 2012 being moved can pull a whole day up. A single daily reading is therefore worth little. Most providers smooth it with a 7-day average.

Not every spend is a sale. Moving your bitcoin from an old wallet to a new one creates a "sale" at a profit although nobody sold. Exchanges reshuffling their reserves do the same.

Off-chain trading is missing. Sales on exchanges without withdrawal and trading in ETF shares do not show up. The NVT ratio and all other on-chain metrics share this limit.

It says nothing about tomorrow. SOPR describes what has happened. Whether the line at 1 holds or breaks is only visible afterwards.

What SOPR means for you as a long-term holder

It makes capitulation visible. In a crash it feels as if everyone is selling. SOPR shows who is selling: the short-term buyers of recent months, or the old holders as well? If only STH-SOPR gives way, that is a normal clean-out. If LTH-SOPR also falls below 1, the bear market is usually well advanced.

It reminds you who you are. A long-term holder does not sell at a loss because others do. How to stay calm in such phases is described in HODL psychology.

It belongs beside a plan, not in its place. Whether you buy more in a cheap zone is something you decide in advance. What an extra purchase near the floor can do is calculated by the floor calculator.