Why does sell pressure repeatedly show up near the break-even point? What's the psychological mechanism behind it?
This relates to loss aversion, a concept frequently discussed in behavioral finance — most investors feel a loss far more intensely than an equivalent gain, which means that while holders are underwater, they tend to keep holding and resist "realizing" the loss. But once price rebounds enough for them to finally break even, the psychological relief of "finally getting out even" leads a meaningful proportion of holders to sell immediately, even if they haven't made much profit — prioritizing exiting the psychological state of being at a loss.
When this collective psychology occurs across enough holders simultaneously, it forms a noticeable cluster of sell pressure right around the break-even point, and this is exactly the behavioral finance basis for why SOPR repeatedly encounters resistance around 1 — the value 1 carries no magic in itself; it's significant purely because it happens to correspond to the actual psychological threshold for a large number of holders.
Besides the indicator itself approaching 1, are there other supplementary signals that can help predict in advance whether a given retest is more likely to succeed or fail?
You can watch volume change alongside the retest — if volume expands notably in tandem while SOPR approaches 1, that indicates relatively strong buying momentum is supporting the rally, and in this case the probability of absorbing break-even sell pressure and successfully breaking through is relatively higher; if volume doesn't expand notably while SOPR approaches 1, that indicates the buying momentum driving price up is relatively weak, and when it meets break-even sell pressure, it may not be enough to hold, making the probability of a failed retest relatively higher.
Another angle worth watching alongside this is the broader macro environment at the time (liquidity conditions, regulatory news, macroeconomic backdrop) — this site previously noted in its MVRV Z-Score piece that market structure shifts as participant composition changes, and the same technical retest pattern can carry a different probability of success under a different macro environment, which is also why SOPR retesting 1 shouldn't be treated as a mechanical signal independent of context.
Between the successful breakout in February 2023 and the failed case in 2024, what clear differences existed in the macro environment, and can that explain the different outcomes?
The successful breakout in early 2023 occurred after the market had gone through a series of confidence-shaking events in 2022 — the LUNA/UST collapse, the FTX failure — with a general view that the market had already undergone a deep flush-out and pessimism was near an extreme. Against this backdrop, even a modest price rebound could draw in relatively committed buyers willing to absorb break-even sell pressure. By contrast, views on whether the market had genuinely entered a new growth phase at other points in time were themselves more divided, and this is reflected in the inconsistent results across retest attempts at different times.
It's worth being honest that precisely unpacking every macro cause behind "why this one succeeded, that one failed" typically requires a more complete after-the-fact analysis, and isn't something you can draw a definitive causal conclusion about just by comparing surface numbers at two points in time — this also echoes a core limitation of an indicator like SOPR: it can help describe the market's current state, but can't on its own explain why it evolved into that state, which generally requires broader macro and market-structure analysis alongside it.
Now knowing SOPR retesting 1 has both successful and failed historical outcomes, how should the average investor actually adjust how they view this indicator?
The most direct adjustment is abandoning the mindset of "a retest occurring means a trading decision should be made immediately," and instead treating the moment a retest occurs as a reminder event worth putting on a watchlist and continuing to track. Concretely, this can be combined with watching volume change as mentioned earlier, continuing to observe developments over the following one to two weeks, and only adjusting judgment based on the actual outcome once the indicator genuinely holds or gets pushed back — rather than rushing to place a bet the moment the retest occurs.
Another practical adjustment is accepting that an indicator like this is fundamentally a probabilistic reference, not a certain prediction — even if you can roughly identify part of the reasoning behind successful versus failed cases (strength of buying momentum, the macro confidence backdrop), that doesn't mean every future retest can be accurately classified in advance. The value of historical cases lies in helping build a framework for what to watch for, not providing a formula that can be directly applied — which is also why even professional on-chain analysts, when facing a situation like SOPR retesting 1, generally take a "watch and wait for confirmation" attitude rather than delivering a definitive conclusion in the moment.
This site has previously covered how SOPR's behavior pattern around the value of 1 is often used by on-chain analysts to read market sentiment. But the phenomenon of "retesting 1" itself doesn't guarantee a single-direction outcome — this piece lays out three real cases from different points in time with different outcomes, showing how this psychological level can actually play out, and why it shouldn't be treated as a guaranteed-win signal.
In early 2023, Bitcoin's SOPR 7-day moving average, after staying below 1 for nearly a full year, began approaching 1 again as price rebounded. Analysis at the time noted that this indicator had attempted to retest 1 multiple times previously and always failed, getting rejected back below 1 (with price falling in tandem) — but this time, SOPR successfully broke through and held stably above 1, indicating price appreciation had moved enough previously underwater holders into profit territory, willing to sell at a profit. This successful breakout was viewed at the time as one of the positive signals that market structure was shifting away from a bear market, with sell pressure easing.
It's worth noting that before that successful breakout in February 2023, SOPR had attempted to retest 1 multiple times and failed each time — encountering resistance near 1 each time and getting pushed back below it, in tandem with price falling again. This pattern of repeated failed retests wasn't unusual during earlier bear-market phases, reflecting how each time a price rebound brought some holders close to their break-even point, that cohort tended to prioritize selling to close the position (even just breaking even). This sell pressure kept suppressing the indicator from genuinely breaking through, until market structure had genuinely shifted.
In 2024, the adjusted SOPR (aSOPR, which excludes short-term noise trades held for under an hour) similarly challenged the historical bull-bear dividing line at 1, with the market watching at the time whether it could genuinely break through. But per analysis at the time, this retest ultimately failed to hold — the indicator encountered resistance again near 1 and fell back, indicating sell pressure hadn't been fully absorbed and market structure wasn't yet ready to support a genuine breakout.
Placing the three cases side by side, the most direct observation is: looking only at the phenomenon of "SOPR approaching or touching 1" itself offers absolutely no way to predict in advance whether this instance will be a successful breakout or a failed retest — both outcomes have repeatedly occurred historically, and both showed a similar approach pattern beforehand. What actually distinguishes the two outcomes generally isn't the indicator value itself, but the more fundamental balance of supply and demand forces reflected behind it: if the buying momentum driving price up and pushing SOPR toward 1 is strong enough to absorb the sell pressure from the cohort that chose to close out right around their break-even point, a successful breakout becomes possible; if that buying momentum isn't strong enough, the same sell pressure is enough to push the indicator right back down.
If you see an analysis noting "SOPR is retesting 1," a more robust attitude isn't guessing in advance whether it will succeed or fail this time, but treating it as a point worth continuing to watch over the following days — the retest occurring in itself doesn't constitute a clear trading signal; only once the retest's actual outcome emerges (holding above, or getting pushed back) does the market offer a provisional answer. Historical cases repeatedly show this process generally requires patient observation, rather than rushing to a conclusion the moment a retest occurs.