Bitcoin UTXO Surpasses 2020 Levels: What Does It Mean for Price?
Bitcoin UTXO Reaches New All-Time High: Is This Bullish or Bearish?
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While Bitcoin has been consolidating below $68,000 this week, bulls have managed to maintain support above the $66,000 mark. Although we haven’t witnessed a significant upward surge, Bitcoin’s resilience against a deeper correction suggests a bullish end to October.
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Adding to the positive outlook, a crypto analyst has identified an emerging trend in Bitcoin’s UTXO metric, hinting at a potential breakout in the cryptocurrency’s price.
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UTXO in Loss Hits Record High
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On September 11, 2024, the number of Bitcoin UTXO in loss reached a new peak, surpassing levels last seen during the COVID-19 crash of 2020 and the September 2023 market bottom.
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Unspent Transaction Output (UTXO) refers to the amount of Bitcoin remaining unspent in a wallet after a transaction. When measured in loss, UTXO indicates the amount of Bitcoin holdings that would currently sell at a loss compared to the last transaction price from the wallet.
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According to Glassnode data, the surge in UTXO in loss during September suggests a significant portion of active Bitcoin addresses are underwater. While this initially might appear bearish, historical patterns tell a different story.
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UTXO in Loss: A Bullish Indicator?
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Crypto analyst CryptoCon highlights that major spikes in UTXO loss don’t typically precede significant price drops. Instead, they tend to occur at the end of downtrends. This trend suggests that the September peak may mark an inflection point for Bitcoin’s price action for the rest of the year.
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Historical Evidence
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Past data reveals a consistent pattern: when UTXO in loss reaches extreme highs, Bitcoin’s price often experiences a reversal. For instance, during the COVID-19 crash in March 2020, a substantial spike in UTXO in loss was followed by a strong rally, propelling Bitcoin to new all-time highs in the subsequent months.
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The last significant spike in UTXO in loss occurred in September 2023, preceding the latest bull market cycle that began in October 2023. This rally culminated in a new all-time high for Bitcoin in March 2024, effectively demonstrating that spikes in UTXO in loss can serve as a signal of positive market momentum.
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Looking Ahead
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If history repeats itself, the September spike in UTXO in loss could signal a market bottom, setting the stage for a rally in the remaining months of the year.
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Interestingly, since this new peak in UTXO in loss, Bitcoin’s price action has been notably positive. At the time of the peak, Bitcoin was trading around $57,000. Since then, it has experienced a considerable rally, inching closer to the $70,000 price level. At the time of writing, Bitcoin is trading at $66,720.
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While this trend suggests a potential bullish outlook for Bitcoin, it’s crucial to remember that markets are volatile and past performance is not necessarily indicative of future results.