- The rise in the UTXO and whale ratio could force BTC price correction.
- Coins in losses were more than those in short term gains.
Bitcoin [BTC] could be at risk of another downtrend, despite struggling to weather mild price increases, according to on-chain analyst SimonaD. Often referred to as the benchmark of the cryptocurrency market, BTC has experienced a series of price swings in recent times.
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The cryptocurrency’s price history has shown a sharp pattern refuses followed by impressive recoveries. But the possibility of another downward move raises important questions about the factors at play.
Ready for an imminent relapse
While this performance has left investors wondering what the coin’s next move will be, SimonaD believed the unspent transaction output (UTXO) could provide some insight. The UTXO refers to the amount of cryptocurrency left over after a successful transaction.
And according to the analyst publication on CryptoQuant, Bitcoin UTXO’s gains had reached 79.53%. But given history, a high UTXO may not necessarily be favorable to the price action. To explain this, SimonaD wrote:
“Usually, a high percentage of UTXOs in earnings can indicate that we are at risk of a sell-off in the next period. When it acted as resistance, we had a price pullback.
In addition, the analyst believed that Bitcoin’s health could be at risk due to the current state of the statistic. However, this depends on the holders decision to sell or hold their assets.
Source: CryptoQuant
Move in losses
In addition to the aforementioned analyst Phi Deltalytics as well explained why Bitcoin could be bearish in the near term. Unlike SimonaD, Phil used the trade whale ratio to come to this conclusion.
The exchange whale ratio is the relative size of the top 10 inflow transactions relative to the total inflow. When it is below 85%, it indicates a bull market. On the other hand, when the statistic is above 85%, it indicates possible mass dumping.
From the map shared by Phil, the exchange whale was at its peak. Therefore, there may be large market movements that a price correction.
Source: CryptoQuant
In another CryptoQuant publication, Phil doubled on its initial bearish stance. This time he used the adjusted Spent Output Profit Ratio (aSOPR). As a representation of total profit and total loss, the aSOPR compares the profit ratio of all market participants.
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Values of the aSOPR greater than 1 imply that coins have moved profitably. When the statistic is exactly 1, it suggests that prices are at a break-even point. And finally, an aSOPR of less than 1 means the market is selling at a loss.
Source: CryptoQuant
At the time Phil published, the aSOPR was less than 1. Therefore, he concluded that,
“Recent sideways moves have officially turned both aSOPR and short-term SOPR into the below 1 territory. The market is not convinced on the bull side.”