Bitcoin UTXO profits fall to lowest level annually, this is what it means

Bitcoin (UTXO) unspent transaction output profit percentage has fallen to its lowest level this year, last seen in October 2023. This decline in this metric aligns with the current fall in the price of bitcoin (BTC) and the downward trajectory of the broader crypto market.

According to a report from CryptoQuant analyst EgyHash, this could be a sign of an incoming massive rally.

Bitcoin UTXO in Declining Profits

A Bitcoin UTXO refers to the amount of cryptocurrency left after a transaction on the network. Analysis of UTXOs is often crucial to understand investor behavior over different periods.

In June, 99% of Bitcoin UTXOs were profitable; however, this number had decreased to 68.5% in September. EgyHash said the drop suggests some market participants have profited from their BTC investments, and its shares, along with ongoing selling pressure, have contributed to a drop in the value of the world’s largest cryptocurrency.

The last time profitable UTXOs witnessed a similar decline, the price of bitcoin soared to a new all-time high, rising 273% from $26,700 to $73,000. This means that a drop in this metric gives room for BTC to rally and possibly hit new highs. EgyHash’s analysis aligns with chain experts’ predictions of a second stage of the BTC bull run in the coming months.

An incoming BTC rally

Another pseudonymous CryptoQuant analyst, Avocado, observed a slight increase in Bitcoin UTXOs in less than six months, which they classified as new investors entering the market earlier this year, probably around March, when BTC hit an all-time high.

Comparing Bitcoin UTXOs less than six months old with past cycles, Alvocado identified a similar pattern in 2019; investors holding UTXOs have exited the market due to losses from the current state of bitcoin or have held onto their BTC and moved into the six-month-plus pool. Regardless, bitcoin’s trajectory over the next 490 days led to a new all-time high.

In addition to the decline in UTXO profits, the price of bitcoin has been stagnant for an extended period. Avocado attributed this stagnation to reduced price volatility resulting from a relative increase in over-the-counter trading compared to exchange-based trading.

“While I have no doubts about the long-term upward trend, in the short term, I think it is prudent to temper expectations and monitor the market closely,” Alvocado said.

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