In this article, let’s examine the latest profit and loss trends in the market based on various on-chain metrics and dynamics such as Return on Output Ratio (SOPR), Long-Term Hodler Cost Base, and Amount of Bitcoin Spent.

SOPR

The first is the return on expenditure spent, which is the actual amount of profit or loss for all of the coins moving in the chain. If SOPR tends to be higher, profit is made (value greater than 1). If it tends down, losses are realized (value less than 1). We use adjusted SOPR, which ignores all expenses for a lifetime of less than an hour.

Bitcoin-adjusted SOPR. Source: Glassnode

During the upswing in Q4 2020, we saw strategic gains, which becomes more apparent if you just look at the long-term SOPR hodler. After the subsequent period of higher profit taking and summer losses, the Hodler finds itself in a more compact profit and loss range of 3% to 5%, which signals that the market is waiting for the next step: Bitcoin.

Bitcoin’s long-term SOPR hodler. Source: Glassnode

Cost base

Over the past few months, long-term owners have seen little returns on their coins sold (compared to all-time highs earlier in the year), showing an increase in the cost base. During the bull market, long-term hodlers have benefited from 300% to 500% by selling much older coins at a lower cost base. Now those profits are starting to decline as the cost base climbed from $ 6,800 in June to $ 14,500.

The cost base of the long-term bitcoin hodler. Source: Glassnode

During the last few days of sell-off, the volume of Bitcoin issued from coins older than a year made up less than 0.5% of the total. Long-term coins, “smart money”, held on to price fluctuations fueled by the failure of Evergrande and a sharp correction in the S&P 500.

In contrast, at the same price, 3.5% of the volume spent in January shows that the long-term hodelr is quite patient. This is an increasing development and support for the arc compression thesis. The number of freely circulating coins available in the market continues to decline while long-term holders continue to sit on the sidelines.

Bitcoin volume spent> 1 year (30 day MA). Source: Glassnode

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Annie

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