According to on-chain data from the market analysis firm Glassnode, a key metric points toward the start of a bull market. 

Researchers at Glassnode say 95% of Bitcoin’s unspent transaction outputs (UTXOs) are currently in profit, which is a characteristic seen in past bull runs.

95% of Bitcoin UTXOs are currently in a state of profit. Extended periods at this level and above are characteristic of bull runs as BTC moves towards new all-time highs.

Most Bitcoin Addresses Are in a State of Profit

When the overwhelming majority of UTXOs is in profit, often the need to sell bitcoin in the near-term declines. 

As such, during an accumulation phase or a run-up to a bull market, many UTXOs tend to be in profit, while during an extended correction, UTXOs enter a state of loss or breakeven.

A possible counter-argument to the presumption that UTXOs become profitable right before or during bull runs is that investors are more likely to sell when they see profits. 

Since October 2019, the Bitcoin price has mostly stayed within the range of $6,000 and $10,500 USD. Following the recent breakout after a full year within that range, the majority of UTXOs are now in a state of profit. 

There is a chance that investors could consider selling their bitcoin, given that the $12,000 to $14,000 USD range is a strong area of resistance for Bitcoin to conquer.

Variables That Could Mean Investors Would Soon Take Profit

A variable that could complicate the macro landscape and the interpretation of associated market data is that Bitcoin has seen unprecedented price action and macro factors in 2020.

On March 13th, the Bitcoin price crashed below $4,000 USD as the pandemic rattled global markets. Consequently, various Bitcoin metrics showed conflicting data.

For instance, on-chain analyst David Puell cited moving profits and losses (MPL) to show the Bitcoin metrics that differ from previous cycles. 

Moving profits and losses (MPL) chart of Bitcoin. Source: David Puell

Historically, when moving profits hit a local high, the price dropped while moving losses increased. This time, moving losses and moving profits are rising together, which has not happened before. Puell noted:

Zoomed-in MPL show just how atypical and chaotic 2019 and 2020 have been for Bitcoin. Major crossover events of such frequency are unprecedented in over 10 years.

Compelling fundamental metrics and factors suggest Bitcoin is at the start of an extended bull market. Other data, like MPL, indicate that the chances of investors taking profit could rise if historical data is considered.

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