98% of Bitcoin's 'Unspent Outputs' Are Worth More Than When Made

The percentage of bitcoin unspent transaction outputs (UTXOs) in profit recently topped 98%, the highest level since December 2017.

AccessTimeIconNov 12, 2020 at 11:39 a.m. UTC
Updated Sep 14, 2021 at 10:30 a.m. UTC
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A bitcoin on-chain metric has increased to three-year highs, suggesting a potential supply shortage and low odds of significant price pullback. While there are conflicting interpretations about this latest signal, many market observers are taking it to be positive for the cryptocurrency. 

The percentage of bitcoin unspent transaction outputs (UTXOs) in profit recently topped 98%, the highest level since December 2017, according to data source Coin Metrics. As well, the number of UTXOs in profit reached a record high of over 110 million. 

The data indicates a large number of holders are currently making money on their coins and may decide either to hold or liquidate, depending on their outlook. Their next step may influence the price trajectory. 

"A high percentage of UTXOs in profit potentially signals that there is relatively low sell pressure since there's a low risk of capitulation. Conversely, it could signal that some investors may soon start taking profits if the potential gains become too good to pass up," according to Coin Metrics' "State of Network: Issue 76."

Bitcoin Percentage of unspent transaction outputs (UTXOs) in profit versus loss.
Bitcoin Percentage of unspent transaction outputs (UTXOs) in profit versus loss.

A UTXO is any chunk of bitcoin that hasn't yet been spent by the current holder, so it can be thought of as all the chunks of bitcoin currently held. A profit-making UTXO is the one whose price at the time of creation is less than the current market price.

Capitulation is the point where investors give up trying to recapture lost gains and sell into the falling market, leading to a more profound decline. Currently, most investors are making money on their investments, and the risk of capitulation is almost nil. Besides, the market mood is bullish, and holders are unlikely to book profits anytime soon. 

Analysts expect the cryptocurrency to consolidate in the short-term before challenging the record high of $20,000 before the year-end.

"Most investors that have held steady for this long would continue to hold till new all-time highs, causing a supply shortage, and acting as a positive reinforcement loop, leading prices higher," Connor Abendschein, research analyst at Digital Assets Data, told CoinDesk in an email.

Large spot buyers have already caused the drying up of sell-side liquidity, and the situation could intensify with the uptick in the percent of UTXOs in profit. 

"Between Grayscale's GBTC trust, MicroStrategy, and the influx of other large spot buyers, the supply of bitcoin is beginning to look more scarce," Matthew Dibb, CEO of Stack Funds, told CoinDesk. Grayscale is owned by CoinDesk's parent firm, Digital Currency Group.

At press time, the cryptocurrency is trading near $15,800, having reached a three-year high of $16,157 early Thursday.


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