The recent decline in the percentage of Bitcoin Unspent Transaction Outputs (UTXOs) in profit has raised concerns among investors and analysts in the cryptocurrency market. This decrease in UTXOs aligns with the plummeting price of Bitcoin (BTC) and the broader decline in the crypto market. Analysts have started interpreting this metric as a potential sign of an incoming bullish rally, despite the current bearish sentiment prevailing in the market.
The percentage of Bitcoin UTXOs in profit has dropped to its lowest level this year, reaching a point last observed in October 2023. In June, 99% of Bitcoin UTXOs were in profit, but this figure has declined significantly to 68.5% by September. This indicates that a considerable number of market participants have realized profits on their BTC investments, leading to increased selling pressure and a subsequent decline in the value of Bitcoin.
Historically, a similar decline in UTXOs in profit has preceded massive price rallies for Bitcoin. The last time such a decline occurred, Bitcoin’s price surged to a new all-time high, increasing by 273%. This suggests that the current situation could potentially pave the way for another bullish run in the coming months. On-chain experts have also echoed this sentiment, predicting a second leg of the BTC bull run on the horizon.
Another noteworthy observation by analysts is the uptick in Bitcoin UTXOs under six months, indicating the influx of new investors into the market. These investors likely entered the market around March, during Bitcoin’s previous all-time high. Comparisons with past cycles show a pattern where investors either exit the market due to losses or transition into the six-month-and-above group, eventually leading to new all-time highs for Bitcoin.
In addition to the decline in UTXOs in profit, Bitcoin’s price has remained stagnant for an extended period. Analysts attribute this stagnation to reduced price volatility, primarily due to increased over-the-counter trading compared to exchange-based trading. While long-term prospects for Bitcoin remain optimistic, some analysts suggest exercising caution and closely monitoring market developments in the short term to gauge potential risks and opportunities.
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