Unspent transaction outputs (UTXO) on the Bitcoin network are revealing a growing sense of capitulation among market participants. According to on-chain analysis, the ratio of UTXOs spent in profit compared to those spent at a loss has plunged to its lowest level in the current bear cycle, marking a potential inflection point for the market.
Sharp shift in UTXO ratios raises questions
CryptoQuant analyst Darkfost highlighted that this signal has activated for the first time since the latest correction began. According to Darkfost, the data indicates a notable increase in positions being closed at a loss, which could signal the start of a broader capitulation phase. CryptoQuant remains a leading research platform for monitoring the crypto market using on-chain metrics.
Darkfost noted that the recent surge in UTXOs spent at a loss suggests the market is entering a bottoming phase—historically, these periods have offered striking opportunities for long-term investors.
The last time this ratio reached similar lows was during the sharp downturn in the previous bear market in mid-2023. Back then, Bitcoin’s price dropped as low as $26,000. While Darkfost warned that this process might not be completed quickly, he emphasized the need to assess timing from a long-term perspective.
Mounting pressure on long-term investors
In a separate analysis, Darkfost indicated that long-term investors are now approaching their own capitulation stage. He pointed out that the Spent Output Profit Ratio (SOPR) within this group has been sliding more deeply into negative territory.
Mini glossary: A UTXO is an unspent transaction output on the Bitcoin network, used to track on-chain movements. The SOPR indicator measures whether spent coins are realizing profits or losses at the moment they change hands.
Despite these shifts, the main driver behind the ongoing correction appears to be the rapid influx of Bitcoin from short-term investors to exchanges. This trend suggests that recent selling pressure is predominantly coming from market participants with a short-term horizon.
What are other analysts saying?
Analyst DurdenBTC also flagged the UTXO ratio, stating that a bottoming signal has re-emerged. According to DurdenBTC, this indicator has historically marked every cycle bottom since 2016, though he cautioned that a period of market discomfort could still last for several weeks.
DurdenBTC commented that the anticipated bottom signal has finally appeared, noting that this indicator has repeatedly identified cycle lows. He argued that such signals do not surface when buying feels comfortable for the majority of investors.
Meanwhile, Swissblock, a renowned on-chain analytics firm, suggested that Bitcoin may have moved past the initial phase of a sharp downturn, but emphasized the market is still in the process of forming a bottom.
Volatility persists on the price front
Global uncertainty increased over the weekend as renewed US military strikes targeted Iranian positions. This development is seen as intensifying selling pressure across risk-sensitive assets worldwide.
Early Sunday morning, Bitcoin’s price dipped as low as $59,800 before staging a partial recovery above the $60,100 mark. While on-chain metrics point to a potential bottom, continued market volatility appears likely in the short term.
