As a seasoned researcher with a deep-rooted interest in the cryptocurrency market, I have witnessed the ebb and flow of Bitcoin’s price action over the years. The recent decline in the percentage of Bitcoin UTXOs in profit has piqued my curiosity, as it mirrors a pattern we saw back in 2023 when BTC surged to new all-time highs.
The proportion of Bitcoin‘s Unspent Transaction Outputs (UTXOs) that are currently profitable has dropped to its lowest point so far in 2023, a level last seen in October 2023. This decrease in this indicator mirrors the recent drop in the price of bitcoin and the overall trend of the crypto market moving downwards.
Based on the analysis of EgyHash from CryptoQuant, it might indicate an upcoming significant price surge.
Bitcoin UTXOs in Profit Decline
A Bitcoin UTXO refers to the amount of cryptocurrency that remains after a transaction on the network. Analyzing UTXOs is often crucial in understanding investor behavior over different periods.
By June, approximately 99% of all Bitcoin transactions (UTXOs) were generating a profit for their owners. Yet, by September, that figure dropped significantly to around 68.5%. EgYHash suggests this dramatic decrease indicates that some investors have cashed out on their Bitcoin investments, and their actions, along with persistent selling pressure, have led to a decline in the value of Bitcoin, the world’s largest cryptocurrency.
Previously, when the number of Unspent Transaction Outputs (UTXOs) in profit saw a comparable decrease, Bitcoin’s price surged to an unprecedented peak, increasing approximately 273% from $26,700 to $73,000. Essentially, this dip could pave the way for Bitcoin to surge again and potentially reach new record highs. EgyHash’s analysis seems to support the consensus among on-chain experts that we might witness a second phase of the Bitcoin bull market in the upcoming months.
An Incoming BTC Rally
A CryptoQuant analyst using the alias ‘Avocado’ noticed a minor increase in Bitcoin transactions that have been active for less than half a year. This group of transactions is believed to represent new investors who joined the market approximately during March, a time when Bitcoin reached its peak price.
Looking at Bitcoin transactions (UTXOs) less than six months old in comparison to previous cycles, Avocado found a pattern similar to 2019. Investors who held these UTXOs either sold off their Bitcoin due to recent market losses or kept their Bitcoin and moved it into the group of those holding for more than six months. However, regardless of this, Bitcoin’s path over the subsequent 490 days ultimately led to a new record high.
Apart from a prolonged flatline in Bitcoins showing profit, its value has remained stable for quite some time. Avocado explains this stability by suggesting that it’s due to the decrease in price fluctuations resulting from an uptick in over-the-counter transactions compared to those conducted on exchanges.
“Though I’m confident we’ll see growth in the future, I think it’s smart to keep hopes in check for now and carefully watch market movements,” said Avocado.
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2024-09-06 18:58