Bitcoin Unspent Transaction Output Accumulation Could Signal Crypto’s Next Bull Run

Story by: Nick Chong

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It is important to note that UTXOs aren’t present on all blockchain networks, with Ethereum using the simpler accounting mechanism to calculate a wallet’s balance or transaction amount.

Regardless of your preference of the two systems, UTXOs play a key role in the analysis done by FlibFlib, which surprisingly paints a bullish picture for the cryptocurrency market as a whole.

“Bitcoin Accumulation [Could Be] Well Underway”

As alluded to earlier, FlibFlib, an insightful crypto trader and analyst, recently took to Twitter to express his opinions that the growing number of unspent outputs could indicate that Bitcoin is undergoing an accumulation phase.

In an accompanying image, UTXO and the value of BTC were put beside each other, drawing connections and trying to discern how the two charts relate.

The analyst first explained that a rise in UTXO count indicates that accumulation is occurring, subsequently drawing attention to the “smart money” traders that bought and held BTC en-masse prior to 2017’s bull run.

UTXOs continued to rise drastically until a few weeks after Bitcoin’s $20,000 peak, when the indicator saw a sharp decline in correlation with BTC’s strong move under $10,000, signaling that a substantial number of traders and investors had sold their holdings in a state of panic. In fact, by July, UTXOs had seen a 20% haircut from its all-time high, returning to levels seen before Bitcoin first surpassed $10,000 in November 2017.

However, since July’s year-to-date low, the lesser-known indicator has been on a tear, outperforming BTC by a handful of percentage points. Flib explained:

“[The chart] appears to support the idea that accumulation is well underway… More people are accumulating a hold position. We could go sub 6k but anything less than 5.5 seems unlikely at this stage.”

The analyst then explained the theory that the most recent 20% drop in UTXOs can be chalked up to the Mt.Gox creditor’s unloading of coins and the end of 2017’s cycle. Touching on what could send BTC higher, they claimed that the unspent output indicator will need to see a “significant uptick,” coupled with a slight increase in bitcoin’s value, to indicate that the bear market has finally run its course.

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