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Spent Output Profit Ratio (SOPR)

Spent Output Profit Ratio (SOPR) evaluates the profit ratio of the whole market participants by comparing the value of outputs at the spent time to created time

Definition

Spent Output Profit Ratio (SOPR) evaluates the profit ratio of the whole market participants by comparing the value of outputs at the spent time to created time. In a simple way, you can estimate the distribution of spent transaction output is in profit or not. SOPR is calculated as the USD value of spent outputs at the spent time(realized value) divided by the USD value of spent outputs at the created time(value at creation).
SOPR=∑o∈spent outputsvalueo∗pricespent,o∑o∈spent outputsvalueo∗pricecreated,oSOPR=\frac{\sum_{o \in \text{spent outputs}} \text{value}_o*\text{price}_{spent, o}}{\sum_{o \in \text{spent outputs}} \text{value}_o*\text{price}_{created, o}}

Steps

1. UTXO is transferred now
2. CryptoQuant locates the USD Value of the spent period and divide them by the USD Value at the created time
Simply put, SOPR = Now value/ Past value
3. Categorize and put some figures separately by span time to conclude more specific meanings

How to use SOPR for investment

By Value itself

  • SOPR value greater than 1 ( SOPR > 1 )
    It implies that the coins moved in a certain timescale are, on average, selling at a profit.
  • SOPR value of exactly 1 ( SOPR =1 )
    It implies that the coins moved in a certain timescale are, on average, selling coins at break even.
  • SOPR value less than 1 ( SOPR < 1)
    It implies that the coins moved in a certain timescale are, on average, selling at a loss.

By examining trend

  • SOPR Trending Higher SOPR trending higher implies profits are being realized and coins that were in profit are being transferred to others. Also, it could be implied that investors who sell their coins in profit are increasing their sell or market condition for sellers are getting more profitable.
  • SOPR Trending Lower 
    SOPR trending lower implies losses are being realized and coins that were in loss are being transferred to others.
    Also, it could be implied that investors who sell their coins in loss are increasing their sell or market condition for sellers are getting less profitable.

Investing Applied Scenario:

  1. 1.
    Historically, in the middle of bull sentiment, the market correction begins right before the bull run begins and making SOPR drop below '1'. This could be the right time to buy before the bull run starts.
  2. 2.
    Historically, in the middle of bear sentiment, the market correction begins right before the bear market starts making SOPR rise above '1'. This could be the right time to sell before the bear market starts.

Why are some indicators modified?

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1) Can less than an hour long aged UTXO mean significance?(aSOPR)

aSOPR stands for adjusted SOPR( Spent Output Profit Ratio) .
It derived from the standard SOPR by excluding UTXOs that has input-output span that are aged less than an hour long.
If there are too many UTXO that are being generated recently, the indicator's value will be made equal to the number of 1 which would mean that many UTXO are at even.

2) What if long/short aged UTXO specifically suffer from loss? (LTH-SOPR, STH-SOPR)

LTH-SOPR stands for Long Term Holder - SOPR ( Spent Output Profit Ratio).
It derived from the standard SOPR by leaving only the UTXO that are aged more than 155 days.
STH-SOPR stands for Short Term Holder - SOPR ( Spent Output Profit Ratio).
It derived from the standard SOPR by leaving only the UTXO that are aged less than 155 days and more than an hour alive.
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Sum Coin Age Distribution (SCA Distribution)
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Last modified 1yr ago