Bitcoin’s unspent transaction outputs indicate that capitulation is in progress, according to an analyst.

Bitcoin Investors Show Signs of Capitulation

An analysis of Bitcoin’s unused trading volume (UTXO) suggests that investors might be capitulating, a trend often observed at the bottoms of bear markets.

On Saturday, analysts at CryptoQuant, referred to as Darkhost, noted that the ratio of profitable UTXOs to those sold at a loss has dropped to its lowest point in this bear market. This is significant because, according to him, it’s the first time this indicator has been triggered since the market began its correction. “It suggests that the number of UTXOs being spent at a loss is reaching considerable levels, signaling a broader capitulation,” he explained.

This particular indicator points to the market potentially entering a phase where prices could bottom out. It’s worth mentioning that the last time this ratio was this low was during the last bear market’s low point in mid-2023 when Bitcoin prices hovered around $26,000.

Dirkforst, another analyst, remarked that these periods have historically been favorable for long-term investors. “This is when the majority tend to give up and lose interest,” he said. But he did add a note of caution, indicating that this process could take a while, and that we’re looking at a long time frame.

On the same day, analyst Darden BTC remarked on the UTXO ratio, believing the bottom signal he has been anticipating has finally appeared. He pointed out that we’ve reached cycle lows not seen since 2016, but warned that things might remain grim for a few more weeks. “If it were easy to buy here, there wouldn’t be a red flag,” he remarked.

Dirkforst echoed these thoughts, indicating that long-term holders seem to be entering a “capacity phase,” while he is observing that spending output (SOPR) for this group is trending more into negative territory. However, he also mentioned that this current correction appears to stem from a surge in Bitcoin inflows to exchanges by short-term holders.

Meanwhile, SwissBlock, an on-chain analytics firm, suggested on Saturday that Bitcoin has likely moved past its initial breakdown but is still in what they call the “fundamental formation stage.” They observed that while prices seem to be stabilizing, the overall momentum remains negative, and Bitcoin’s impulse has only just returned to a neutral stance.

Possible Increase in Selling Pressure

Additionally, there are concerns that uncertainty and selling pressure might escalate following the U.S. military’s renewed strikes on Iranian targets over the weekend.

According to Central Command, U.S. warplanes targeted ten Iranian military locations in and around the Strait of Hormuz late Saturday, reacting to recent Iranian drone attacks on commercial vessels.