Bitcoin’s famed volatility index has hit an unprecedented low, signalling a period of unexpected stability in the cryptocurrency market. However, beneath this calm exterior lies a potentially worrisome statistic: around 80% of Bitcoin holders currently find themselves in a state of profit, setting the stage for a potential sell-off in the near future, as per analysts’ observations.
CryptoQuant, a cryptocurrency analytics firm, has compiled data from Bitcoin’s blockchain that sheds light on the situation. According to their findings, unspent transaction outputs (UTXOs) currently in a state of profit comprise a staggering 79.5%. UTXOs represent the leftover fragments of Bitcoin following transactions, serving as integral components of financial tracking in the blockchain.
Think of UTXOs as the change received after spending bitcoins. Rather than lower currency denominations, they constitute fractions of bitcoins usable as inputs for future transactions. This UTXO model acts as the mechanism by which the Bitcoin network keeps tabs on ownership and avoids double-spending, ensuring each UTXO functions as a one-time-use input.
The voluminous presence of unspent UTXOs in profit territory highlights that a substantial number of Bitcoin investors stand to make gains by liquidating their holdings at current price levels. While the quantity of UTXOs held varies among investors, the implication remains the same.
CryptoQuant’s insightful analysis has uncovered historical correlations. In the past, when UTXOs in profit surpassed 87%, Bitcoin’s price encountered resistance or later became support after breaking through. Should Bitcoin’s price descend below current levels, this could transform into a resistance threshold, potentially causing a price drop. Conversely, if Bitcoin ascends beyond this mark, it might provide the impetus needed to cross the elusive $30,000 barrier.
There’s been a recent surge in optimistic predictions for Bitcoin’s future price trajectory. One prominent analyst even envisions a remarkable surge of over 130%, propelling Bitcoin to the $70,000 range by year-end. Additionally, investor Preston Pysh has forecasted a steady annual increase of 100% in comparison to fiat currencies like the U.S. dollar.
Interestingly, data sourced from on-chain analytics firm Santiment highlights an intriguing trend: a relatively limited number of Bitcoin addresses collectively control a significant portion of the cryptocurrency’s circulating supply. To be precise, 15,870 addresses each holding over 100 BTC collectively command a staggering 11.5 million coins.
As Bitcoin’s stability persists and its holders grapple with profit decisions, the coming weeks will undoubtedly prove pivotal in shaping the cryptocurrency’s trajectory. The intricate balance between profits, predictions, and market dynamics will inevitably guide Bitcoin’s journey in this era of remarkable volatility restraint.