SOPR Indicator: Reading Profit-Taking Around 1.0
Lesson 6 of 10 · Intermediate
Defining SOPR: at what profit or loss was each coin spent?
SOPR (spent output profit ratio) answers a simple question: were the coins spent on-chain today moved, on average, at a profit or at a loss? For each spent output, its dollar value at the time it was spent is divided by its dollar value at the time it was created, and the results are summed, weighted, for the whole day.
- SOPR above 1: the coins that moved were on average in profit; profit was realized.
- SOPR below 1: on average they moved at a loss; loss was realized.
- SOPR near 1: the movements happened around breakeven.
Hypothetical example: a coin created at $50,000 is spent today at $60,000; its ratio is 1.2. Another coin created at $70,000 is spent today at $60,000; its ratio is about 0.86. Daily SOPR is the weighted average of all such ratios.
The difference between SOPR and MVRV is that MVRV measures the unrealized profit or loss of the whole supply, while SOPR looks only at the coins that actually moved; it is behaviour, not state.
Raw, adjusted and entity-adjusted versions
Raw SOPR is full of noise, because it counts every coin movement, including movements with no economic decision behind them. That is why several refined versions are in common use:
| Version | What it removes | Limitation |
| Raw SOPR | Nothing | Internal and rapid movements pull the number toward 1 |
| Adjusted (aSOPR) | Outputs younger than one hour | Does not remove longer internal moves |
| Entity-adjusted | Transfers between addresses of the same entity | Depends on the quality of clustering and labels |
SOPR can also be computed separately for cohorts: STH-SOPR for young coins and LTH-SOPR for old coins. STH-SOPR is more sensitive to the behaviour of recent buyers and more volatile; LTH-SOPR usually shows the profit margin at which long-term holders move their coins.
Reading reactions around 1
The behavioural logic behind the level 1 is simple: most people dislike selling at a loss, and when price returns to breakeven, some just want to get out "even."
- In an uptrend: when price corrects, SOPR falls back to about 1 and then rises again, it can indicate that holders are unwilling to sell at a loss and that selling at breakeven was absorbed.
- In a downtrend: when SOPR rises from below 1 to about 1 and then turns down again, it can indicate that holders at a loss sell at the first chance of breakeven.
- Breaking the pattern: when, in an uptrend, SOPR stays below 1 for a while, many holders have become willing to exit at a loss, a change in behaviour that deserves attention.
These are behavioural patterns, not rules. There have been many times when SOPR crossed 1 and the "usual" pattern did not work. Daily data carries a lot of noise; a 7-day average is better for seeing the trend.
Limitations: where SOPR misleads
- Dollar weighting: one very large movement by a single entity can determine the whole day's number. A custodian moving old coins to a fresh wallet can look like "massive profit taking."
- Custody and ETF movements: internal transfers that are not correctly labelled push SOPR up or down meaninglessly; the entity-adjusted version helps only partly.
- Reference price: the value at creation and spending is usually estimated from a daily or hourly price, not the actual price at which that person traded.
- Off-chain trading: the profit and loss of traders who buy and sell inside exchanges, or who trade ETF shares, never appears in SOPR.
So SOPR mostly describes the behaviour of on-chain holders, who are only part of the market.
SOPR alongside other indicators
SOPR becomes more meaningful when read together with the overall state. A "high MVRV" combined with "SOPR sustained above 1 and rising" means there is a lot of paper profit and part of it is being realized. "MVRV near 1" combined with "SOPR below 1" means losses are being realized and weak sellers are exiting. Neither combination is an entry or exit point; they only help you understand what stage of profit-taking or capitulation the market is in.
Hypothetical step-by-step scenario: suppose that after a multi-month rise, price corrects by about 15% in two weeks.
- STH-SOPR falls from about 1.05 to about 0.98; recent buyers briefly sold at a small loss.
- LTH-SOPR remains above 1; old holders are not broadly selling at a loss.
- A few days later STH-SOPR returns above 1 and its 7-day average rises too.
A cautious reading: fear-driven selling came mostly from recent buyers and has so far been absorbed. A wrong reading: "so this is a certain bottom." If in the following weeks STH-SOPR stays below 1, that picture changes quickly.
Common mistakes
- Buying or selling mechanically each time SOPR touches 1.
- Using raw SOPR without allowing for internal movements and daily noise.
- Treating STH-SOPR and LTH-SOPR as the same when their behaviour and volatility differ greatly.
- Assuming SOPR shows the profit and loss of the whole market, including exchange traders and ETFs.
- Drawing a conclusion from a one-day spike without checking which entity produced it.
What do volume and data say here?
SOPR shows profit-taking on-chain; volume and order flow show how that supply was absorbed in the market:
- If SOPR rose (profit-taking) but price held steady on high volume and spot CVD did not turn negative, demand probably absorbed the supply.
- If SOPR rose and at the same time inflows to exchanges and aggressive spot selling appeared, profit-taking really reached the market.
- If SOPR is oscillating around 1 and funding and open interest are also calm, the market is probably in a waiting phase.
For your own check, find days when SOPR has an odd spike and look at the day's largest transactions in an explorer; sometimes "massive profit-taking" is only a cold-wallet move.
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Frequently asked questions
What is SOPR?
The ratio of the dollar value of spent coins at the time of spending to their value at the time of creation; above 1 means realized profit and below 1 means realized loss.
What is the difference between SOPR and aSOPR?
aSOPR removes outputs younger than one hour to reduce the noise of rapid movements. The entity-adjusted version also sets aside transfers within one entity.
Is SOPR returning to 1 a buy signal?
No. The pattern has reflected breakeven behaviour in some periods, but it has broken many times. Treat it as context and test it against other data.
Education only, not a recommendation to buy or sell; we never give signals. Price examples are illustrative. Test any method on a demo account first, with strict risk management.