UTXO analysis involves examining Unspent Transaction Outputs on a blockchain, particularly Bitcoin’s, to gain insights into network activity, coin distribution, and holder behavior. Each UTXO represents a specific amount of cryptocurrency received in a transaction that has not yet been spent. By tracking these outputs, analysts can determine coin age, realized price, and the profit or loss status of various coin cohorts. This method provides a granular view of network economics.
Context
UTXO analysis is a powerful on-chain forensic tool providing deep insights into the fundamental state of the Bitcoin network and its participants. It helps differentiate between short-term speculative activity and long-term holding patterns, offering valuable context for market news. Debates often concern the interpretation of specific UTXO metrics, such as Coin Days Destroyed or Realized Cap, to predict market cycles and investor sentiment.
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