Bitcoin (BTC) is currently experiencing a recovery from a significant event known as a “black swan.” This event has not been seen since the COVID-19 crash in March 2020, according to data from on-chain analytics platform CryptoQuant. The platform recently released a Quicktake post on September 7, highlighting a major surge in loss-making unspent transaction outputs (UTXOs).
UTXOs are essentially the remaining Bitcoin after a transaction on the blockchain has been executed. CryptoQuant’s UTXOs in Loss metric tracks instances where a large number of these UTXOs are worth less than their original acquisition price. The current data reveals that there are more UTXOs in loss compared to their acquisition price than at any other time since March 2020.
During the March 2020 event, the price of BTC/USD plummeted by 60% and reached its lowest levels since March 2019. These lows were never seen again. By comparing the current UTXOs in Loss data to that of the black swan event in March 2020, CryptoQuant contributor Woominkyu suggests that Bitcoin may be experiencing or recovering from another curveball selling event.
Woominkyu states, “Given that the current level of the ‘UTXOs in loss’ indicator mirrors that of the Black Swan event between March and April 2020 (due to the Coronavirus), those anticipating another Black Swan event might want to consider whether we are already in the midst of the event they are waiting for.”
The chart provided by CryptoQuant shows that 38% of UTXOs were in loss at the end of August, a percentage last seen in April 2020. When a large number of UTXOs are in loss, it suggests that investors may be more inclined to sell, indicating market anxiety. Conversely, when most UTXOs are profitable, it reflects an optimistic outlook and stronger holding sentiment among investors.
At the moment, Bitcoin is trapped within a tight range and lacks a clear price trend. Data on cost basis, which shows the acquisition prices of different investor cohorts, indicates that short-term holders incur losses when BTC/USD drops below approximately $27,000. However, there has not yet been a full capitulation event recorded on-chain.
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers are advised to conduct their own research before making any financial decisions.
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