Bitcoin Holders Resume Accumulation: Why This Signals a Bullish Trend

The latest insights from Glassnode’s “Week Onchain” newsletter unveil a significant change in Bitcoin’s market dynamics. Long-term holders and major investors are returning to a pattern of accumulation, reversing the trend of widespread distribution seen earlier in 2023. This shift suggests a potentially bullish future for Bitcoin, providing a ray of Optimism amidst the broader market’s persistent fluctuations. As LTHs and large investors re-engage in accumulation, the crypto market could be poised for a positive turnaround.

• The Bullish Arguments For Bitcoin
• The Bearish Arguments

The Bullish Arguments For Bitcoin

The Bitcoin market has faced a challenging environment in recent months, especially after hitting an all-time high in March 2024, marked by a notable distribution phase. However, this trend now appears to be reversing. Wallets of various sizes actively participated in this distribution, but it’s the large wallets, often linked to institutional investors and ETFs, that are particularly noteworthy. These significant players are now moving towards accumulation, indicating a potential market shift. Furthermore, the Accumulation Trend Score (ATS), which assesses weighted balance changes in the market, has hit its peak value of 1.0. This metric serves as a strong signal of significant accumulation activity over the past month, pointing to a potentially bullish outlook for Bitcoin.

The Bitcoin market has faced a challenging environment in recent months, particularly after hitting an all-time high in March 2024, marked by notable distribution. However, there are now indications of a reversal in this trend. Over the past month, the market has witnessed a shift towards accumulation, especially among large wallets often linked to institutional investors and ETFs. This change is reflected in the Accumulation Trend Score (ATS) reaching its peak value of 1.0, indicating a significant build-up of Bitcoin holdings. The ATS, which measures weighted balance changes across the market, serves as a strong signal of this accumulating trend. All wallets, regardless of size, have actively participated in this distribution phase, but it’s the behavior of the larger wallets that’s particularly noteworthy now, as they lead the way in this new accumulation phase.

This uptick in accumulation is reflected in the actions of Long-Term Holders (LTHs), who have added approximately 374,000 BTC to their holdings over the past three months after a significant divestment phase. Once again, LTHs—a pivotal force in the Bitcoin ecosystem—are demonstrating a strong preference for holding their coins. The 7-day change in LTH supply has shifted back to positive, highlighting a decreased willingness to sell and an increased emphasis on accumulation. Despite a period of intense distribution from April to July, Bitcoin’s spot price has maintained its position above the Active Investor Cost Basis, a key indicator that separates bullish and bearish investor sentiment. As the report observes, “The market’s resilience NEAR this level indicates underlying strength, suggesting that investors are broadly expecting positive market momentum in the short to medium term.” This renewed focus on accumulation among LTHs, coupled with the market’s ability to find support, paints a picture of optimism and stability in the Bitcoin market.

The Bearish Arguments

The market faces challenges, with the Cumulative Volume Delta (CVD) metric revealing a persistent net sell-side pressure in spot markets. Over the past two years, the median Spot CVD value has ranged between -$22 million and -$50 million, indicating a consistent bias towards selling. An adjusted variant of the CVD metric, which takes this bias into account, suggests a potential LINK between the recent failure to breach the $70,000 resistance level and weak spot demand. This implies that a recovery in demand, signaled by a return to positive adjusted CVD values, could be key to overcoming this technical hurdle. As such, market watchers are keenly monitoring the adjusted CVD for signs of a potential shift in the demand-supply dynamics that could pave the way for a breakout above the crucial $70,000 mark.

The ongoing accumulation by Long-Term Holders (LTHs), regardless of the volatile sideways price movements, showcases a steadfast and enduring investor base. The proportion of Bitcoin network wealth in the hands of LTHs remains notably high when compared to past all-time high breakouts. This trend suggests that these investors are disinclined to offload their assets at present prices, hinting that they may be anticipating higher valuations before increasing their sales. Notably, the LTH Sell-Side Risk Ratio, a barometer that quantifies realized profits and losses relative to the market’s Realized Cap, stands at a lower level than in prior cycles. This indicator implies that profit-taking among LTHs is somewhat subdued, further reinforcing the notion that these investors are not yet ready to cash out their holdings. In essence, the current market dynamics reflect a strong underlying support from long-term investors who appear poised for potential upside in the Bitcoin market.

The return to accumulation by Bitcoin holders, especially Long-Term Holders (LTHs), signals a potentially bullish market trend. This shift is backed by resilient holder behavior, indicating a strong underlying conviction among investors. Elevated network wealth held by these long-term investors, coupled with a strategic focus on accumulation amidst recent market volatility, further supports this positive outlook. Together, these factors could pave the way for a significant upward movement in Bitcoin’s value, suggesting a robust market recovery in the making.