’s prolonged consolidation may have frustrated the entire market. However, the growth in Unspent Transaction Outputs (UTXOs) offers a glimmer of hope that relief could be near.
- Looking at the Bitcoin funding rate, it appears that traders share the sentiment that a recovery could happen soon.
- At the time of writing, BTC was valued at $25,730, with a slight decrease in the past 24 hours.
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While Bitcoin’s price may be in a dull period, significant metrics for Bitcoin suggest that investors might start accumulating.
There Could Be Relief in Bitcoin’s Price
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Bitcoin’s prolonged consolidation may have frustrated the entire market. However, the growth in Unspent Transaction Outputs (UTXOs) offers a glimmer of hope that relief could be near. For context, the UTXO model is a fundamental element of Bitcoin that displays unspent transaction outputs, which are unused transaction outputs used as inputs in new transactions.
According to Korean trader Mignolet, the increase in UTXOs may be related to increased wallet activity and highly active Over-The-Counter (OTC) trading. Mignolet noted the following in CryptoQuant’s analysis:
“The most notable data during the frustrating price consolidation period since Q2 is the number of UTXOs, and the entities capable of acting this way are institutions or whales.”
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The analyst mentioned that expecting outflows despite high volatility is not uncommon. However, this time, OTC outflows reached as high as 230,000 BTC, followed by another 90,000 BTC.
Another metric to look at is the percentage of profitable UTXOs. By definition, this metric shows the percentage of the total UTXO set that is currently in a profitable state. Higher values for profitable UTXOs indicate market peaks, while lower values indicate market bottoms.
BTC is low and investors are on the rise
As of the time of writing, profitable UTXOs had significantly dropped. This decline implies that Bitcoin may currently be below its true value and could be a time for investors looking for short-term gains to start accumulating.
In summary, Mignolet compared OTC trading activity and UTXO data to suggest that Bitcoin may soon come alive. His exact words are:
“Even if we experience more price drops, the likelihood of a rapid price recovery is high.”
Looking at the Bitcoin funding rate, it appears that traders share the sentiment that a recovery could happen soon. Funding rates, as the name suggests, are periodic payments made between long and short traders in perpetual positions.
A positive funding rate indicates an overall bullish sentiment, while a negative sentiment suggests that short positions are paying long positions to stay open. Hence, there’s a bearish trend. As of September 2nd, the Bitcoin funding rate dropped to -0.002%.
Therefore, a move towards the positive territory signifies a shift in the sentiment of the initial traders. At the time of writing, BTC was valued at $25,730, with a slight decrease in the past 24 hours.