Analysis of Bitcoin unspent transaction outputs (UTXOs) suggests investors are capitulating, a pattern that has historically coincided with bear market bottoms.
The ratio of the number of UTXOs spent in profit versus at a loss has fallen to its lowest level this bear market cycle, said CryptoQuant analyst known as Darkfost on Saturday.
This is the first time this signal has triggered since the correction began, “demonstrating that the number of UTXOs spent at a loss is reaching significant levels, reflecting the start of a broader capitulation,” he said.
The metric could suggest markets are entering a bottoming phase. The last time it fell this low was in the depths of the previous bear market in mid-2023, when BTC prices fell to around $26,000.
“These periods have always been profitable for long-term investors,” Darkfost said. “They correspond to the moment when the majority gives up and loses interest.”
He cautioned that it is a process that takes time.
Bitcoin UTXO profit-loss ratio at bear market low. Source: CryptoQuant
“The bottom signal I’ve been waiting for just fired,” said analyst DurdenBTC on Saturday, also pointing to the UTXO ratio. “It’s caught every cycle low since 2016, and it will still feel terrible for weeks,” he added. “If buying here were comfortable, the signal wouldn’t exist.”
Related: Bitcoin faces fresh capitulation risk as 50K BTC moved at a loss
In a separate post, Darkfost added to his findings, stating that long-term holders are starting to “enter a capitulation phase,” saying that the Spent Output Profit Ratio (SOPR) is increasingly moving into negative territory for this cohort.
However, he also said that this correction has been largely fueled by the rapid increase in BTC inflows to exchanges from short-term holders.
Meanwhile, onchain analytics firm Swissblock said on Saturday that Bitcoin has likely moved beyond the initial breakdown, but “we’re still in the base formation phase.”
“Price is stabilizing, yet momentum remains deeply negative, and Bitcoin impulse has only just returned to neutral.”
Selling pressure may increase
Uncertainty and selling pressure may increase following resumed strikes by the US military on Iranian targets over the weekend.
US fighter jets conducted strikes on ten Iranian military targets at multiple locations in and near the Strait of Hormuz on Saturday in response to an Iranian drone attack on a commercial ship, reported Central Command.
BTC prices fell to $59,800 in early trading on Sunday, but had recovered the $60,100 level at the time of writing.
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