SOPR with Z-Score Table

How it works

The Spent Output Profit Ratio (SOPR) calculates whether cryptocurrencies are being sold at a profit or loss by tracking the price of spent transaction outputs relative to their original acquisition price. It measures the realized profit or loss across all coins moved on-chain during a specific period, providing insights into market participants' behavior.

The indicator applies a custom Simple Moving Average (SMA) to smooth the SOPR signal and generates a normalized Z-Score to contextualize the metric's current value against its historical range. By clamping the Z-Score between -2 and +2, traders can quickly understand how extreme the current market sentiment is compared to previous periods.

Why it may be useful

The SOPR with Dynamic Z-Score provides traders with a unique on-chain perspective of market psychology, revealing whether market participants are selling at a profit or experiencing losses. By quantifying the sentiment and emotional state of cryptocurrency holders, this metric helps traders understand potential market turning points and investor behavior.

The normalized Z-Score adds an additional layer of sophistication by scaling the SOPR relative to its historical context, allowing traders to identify potential market extremes. When the Z-Score moves significantly outside its normal range, it can signal potential trend reversals or suggest whether the market is experiencing unusual buying or selling pressure.

When to explore it

This indicator works best on daily charts for major cryptocurrencies like Bitcoin, Ethereum, and Litecoin, providing insights into market sentiment during different market cycles. Traders should pay close attention when the SOPR moves significantly above or below its typical range, as these movements might indicate potential market turning points or extreme investor behavior.

The SOPR with Dynamic Z-Score is particularly useful during periods of market uncertainty, helping traders assess whether current price movements are supported by on-chain transaction dynamics. By combining this on-chain metric with other technical analysis tools, traders can develop a more comprehensive understanding of market trends and potential future price movements.

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