The percentage of Bitcoin Unspent Transaction Outputs (UTXOs) in profit has recently dropped to its lowest level in the year, a trend last observed in October 2023. This decrease in the metric coincides with the ongoing downward spiral in bitcoin’s (BTC) price and the general trajectory of the broader cryptocurrency market. The report from CryptoQuant analyst EgyHash suggests that this decline could signal the potential for a significant rally in the near future.
Bitcoin UTXOs represent the cryptocurrency amount that remains after a transaction on the network. Examining UTXOs is critical for understanding investor behavior across various time frames. In June, 99% of Bitcoin UTXOs were in profit, but by September, that number had dwindled to 68.5%. EgyHash indicates that this sharp decline indicates that some market participants have decided to cash in on their BTC investments. Their actions, combined with continuous selling pressure, have contributed to the drop in the value of the world’s leading cryptocurrency.
Historical data shows that the last time UTXOs in profit witnessed a significant decline, bitcoin’s price surged to a new all-time high, escalating by 273%. This suggests that a decrease in this metric could pave the way for a BTC rally, potentially reaching new peaks. EgyHash’s analysis aligns with predictions from on-chain experts who foresee a second phase of the BTC bull run in the upcoming months.
Another CryptoQuant analyst, Avocado, noticed a slight rise in Bitcoin UTXOs held for under six months. These UTXOs are likely owned by new investors who entered the market earlier in the year, possibly around the time when BTC reached its peak value. Comparing this data to past cycles, Avocado identified a similar pattern in 2019. Investors holding UTXOs for under six months either exited the market due to losses from bitcoin’s current state or retained their BTC and moved into the six-month-and-above group. In either case, bitcoin’s trajectory over the following 490 days resulted in a new all-time high.
Market Stagnation and Price Volatility
In addition to the decline in UTXOs in profit, bitcoin’s price has remained stagnant for a prolonged period. Avocado attributes this stagnation to reduced price volatility stemming from a relative increase in over-the-counter trading compared to exchange-based trading. While Avocado remains optimistic about bitcoin’s long-term upward trend, they advise caution in the short term and recommend closely monitoring the market for any developments.
