CryptoQuant analyst Darkfost reports that Bitcoin’s UTXO profit-loss ratio has hit its lowest point since the current bear market, signaling a potential capitulation. This could mark the start of a bo
Cryptocurrency analysts have flagged an important signal in the form of unspent transaction outputs (UTXOs) hitting their lowest profit-loss ratio during this bear market cycle, suggesting that investors may be reaching a capitulation point. CryptoQuant analyst Darkfost highlighted these findings on Saturday, noting that the metric has not been this low since mid-2023 when Bitcoin prices were around $26,000.
Darkfost explained, “These periods have always been profitable for long-term investors,” referring to how such signals often precede bear market bottoms. He further stated, “It’s the moment when the majority gives up and loses interest.” Analyst DurdenBTC also chimed in, emphasizing that this signal has historically caught every cycle low since 2016.
The analysis by Darkfost focuses on long-term holders entering a capitulation phase as indicated by the Spent Output Profit Ratio (SOPR) moving into negative territory. However, he noted that recent selling pressure is largely due to short-term holders moving large amounts of Bitcoin to exchanges following increased inflows from these sources.
Onchain analytics firm Swissblock reported that while price stabilization may be on the horizon, momentum remains weak and a true bottom has not yet been confirmed. The company stated, ‘Price is stabilizing, yet momentum remains deeply negative, and Bitcoin impulse has only just returned to neutral.’
Market sentiment could worsen following military strikes by US forces against Iranian targets in response to an Iranian drone attack on a commercial ship near the Strait of Hormuz. These events led BTC prices to dip below $59,800 but quickly recovered above $60,100.
These signals and market movements are significant for traders as they may indicate that we’re nearing a bottom in Bitcoin’s bear market cycle. Analysts caution that this process will take time before any sustained recovery can be expected.
Traders should watch the UTXO metrics closely to gauge whether long-term holders continue capitulating, which could provide further insights into the potential for a market rebound.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.