This chart shows whether Kaspa holders are selling their coins at a profit or a loss. In essence, it compares the realized value of a transaction (in USD) to its original cost basis. The formula calculates this below: 

SOPR = Value of KAS when spent / Value of KAS when acquired

Whereby, 

SOPR > 0: Coins are being sold at a profit

SOPR = 0: Break-even point

SOPR < 0: Coins are being sold at a loss

Why is it Important?

The SOPR provides a snapshot of market participant behavior during a specific point in time. For example, if continual significant losses are realized (i.e., a continual negative SOPR), investors may be fearful and expect a KAS to drop in price, causing major selloffs. 

How to Read the Chart:

The Kaspa Spent Output Profit Ratio (SOPR) Chart consists of the following components:

1. The Market Price of Kaspa: The gray line depicts the market price of Kaspa in USD. 

2. The SOPR is Displayed as: 

   • Green if the coins are being sold for a profit; SOPR greater than 0.

   • Red if the coins are being sold at a loss; SOPR less than 0.

3. 7 DMA: Additionally, one can click on the yellow line in the legend to show the 7-day moving average of the SOPR. 

4. 30 DMA: One can click on the orange line in the legend to show the 30-day moving average of the SOPR.

When visualized on a chart, SOPR tends to fluctuate around the value of 0. Notably, in bull markets, the SOPR typically finds support above 0, meaning that profitable sales are more common. 

Conversely, during bear markets, values above 0 tend to be rejected, as sellers are often exiting at a loss. This pattern makes SOPR a useful tool for spotting potential market tops and bottoms.

Want to Learn More?

You can learn more about the SOPR indicator in the article "Introducing SOPR: spent outputs to predict bitcoin lows and tops" Renato Shirakashi.