Unspent transaction outputs on the Bitcoin network, that is, UTXO data, pointed out that the tendency to capitulate in the market is strengthening. On-chain analysis showed that the ratio of the number of UTXOs spent in the profit to those spent in the loss has fallen to the lowest level in this bear cycle.
Noticeable break in UTXO rate
CryptoQuant analyst Darkfost stated that this signal has been activated for the first time since the correction process began. According to the analyst, this picture suggests that positions closed at a loss have increased significantly and a broader period of surrender has begun. CryptoQuant is among the research platforms that monitor the crypto market via on-chain data.
Darkfost said that the increase in the number of UTXOs spent at a loss shows that the market has entered the bottoming phase, and that such periods have previously presented remarkable opportunities for long-term investors.
The rate in question last fell to similar levels during the harsh part of the previous bear market in mid-2023. At that time, the Bitcoin price dropped to around $26,000. While Darkfost warned that this process may not be completed in a short time, he emphasized that the timing should be evaluated within the long-term framework.
Pressure is increasing on long-term investors
In a separate assessment, Darkfost noted that long-term investors are also starting to approach the capitulation phase. The analyst said that in this group, the Spent Output Profit Ratio, or SOPR indicator, is increasingly moving into the negative zone.
Mini dictionary: UTXO refers to transaction output that has not yet been spent on the Bitcoin network and is used to track on-chain transactions. SOPR is an indicator that measures whether the spent coins change hands with a profit or a loss.
On the other hand, it was also stated that the main source of the current correction is the rapid Bitcoin inflows from short-term investors to the stock markets. This shows that the selling pressure is carried mostly by short-term participants.
What do other analysts say?
DurdenBTC also pointed out the same UTXO rate and argued that the bottom signal was working again. The analyst stated that the indicator has hit the bottom in every cycle since 2016, but the disturbing outlook in the market could continue for weeks.
DurdenBTC said that the bottom signal he had been waiting for had finally arrived, that this indicator had reached low levels in past cycles, and that such a signal would not appear in an environment where buying felt comfortable.
On the other hand, Swissblock evaluated that Bitcoin may have left its first hard breakout phase behind, but the market is still in the bottoming phase. Swissblock is known as one of the analysis companies that monitor the on-chain market structure.
Volatility continues on the price side
The US military’s renewed attacks on Iranian targets at the weekend increased uncertainty in global markets. It is evaluated that this development may strengthen the selling pressure in risky assets.
Bitcoin price fell to $59,800 early Sunday morning. Then, a partial recovery was seen and the price climbed above the $60,100 level. Although on-chain indicators point to a bottom forming, it seems likely that volatility will continue in the short term.
