Most Bitcoin holdings are currently in a profitable position after the recent rally of the largest cryptocurrency by market capitalization, data from blokchain data analyzer Glassnode shows. The data firm's UTXO Realized Price Distribution (URPD) metric puts Bitcoin's share of making money at 81%.
UXTO is short for unspent transaction output. It may simply be related to the change you receive when you make a purchase. If, for example, you want to buy something worth 3 BTC, but your wallet balance is 5BTC, you cannot just choose 3BTC to make the payment.
[amazon box="B00R6MKDDE"]Bitcoin UTXOs represent green numbers
The UTXO resembles how you simply cannot choose $ 70 from a $ 100 bill. For a Bitcoin transaction, the network takes the 5 BTC in your wallet, splits it into unspent Bitcoin, and credits the merchant the agreed amount while your wallet receives the change or change of 2 BTC.
Handling transactions in this way helps the Bitcoin network track and account for fund movements. Interestingly, this also allows you to track the initial price points / ranges for each UTXO (in our example, the 'change' for a buyer and the payment to the seller). It is in those price ranges that the URPD metric tracks to measure the profitability of new and current Bitcoin holdings.
That such a large proportion of BTC holdings are currently in the green could be indicative of a bull market as the Bitcoin halving event approaches. It also represents a significant shift from the coronavirus - driven sell-off in March, which saw the proportion of profitable UTXOs plummet to 40% on March 16, according to Glassnode data. The low UTXO profitability of 40% reached in March was the lowest figure since October 2015.
Despite the positive trend, Glassnode warns that a prolonged rally could trigger a selloff driven by investors who might want to make some gains.
With so many investors in profitable positions, significant increases in the price of BTC in anticipation of the halving could see some make short-term gains.
Glassnode in Twitter
