Bitcoin UTXO data points to end of bear market

More than 27% of all Bitcoin transaction outputs are currently in the red, meaning that holders bought coins at a higher price than the current rate of around $76.300. According to an analysis by CryptoQuant, this level has consistently proved to be a bottom in earlier cycles, and the data indicates that a return to a full-blown bear market is becoming increasingly unlikely.

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In brief:

• More than 27% of all Bitcoin UTXOs are currently at a loss, comparable to levels from 2019 and 2023.
• CryptoQuant analyst DanCoinInvestor states that this pattern signalled the end of a bear market in earlier cycles.
• A further downward cycle is considered increasingly unlikely based on this data.

What are UTXOs and why are they relevant?

UTXO stands for Unspent Transaction Output and represents an amount of Bitcoin that someone owns but has not yet spent. When a large proportion of these outputs are at a loss, this means that many holders bought their Bitcoin at a higher rate than the current market price.

Historically, this has been a gauge of the degree of pain among investors. The more UTXOs are in the red, the greater the share of the market suffering losses. That sounds negative, but it was precisely at those moments that the market proved to form a bottom in the past.

Pattern from 2019 and 2023 repeats itself

The CryptoQuant chart shows three similar peaks in UTXOs at a loss: around 2019, in 2023 and again now. In both previous cases, such a peak marked the end of the downward phase, after which the Bitcoin price recovered.

Analyst DanCoinInvestor of CryptoQuant writes that declines of this magnitude in earlier market cycles were more than a short-term recovery. According to him, they had enough strength to definitively end bear markets.

Whether the current situation marks such a turning point again remains an expectation based on historical patterns. On-chain data never offers guarantees, but according to CryptoQuant, the pattern evokes clear parallels with earlier bottoms.