Latest insights from Glassnode’s “Week Onchain” Newsletter It reveals a major shift in Bitcoin market dynamics as long-term holders and large investors appear to be resuming their accumulation pattern. This trend represents a departure from the broad-based distribution seen earlier this year, providing a potentially bullish outlook for Bitcoin, despite ongoing volatility in the broader market.
Bullish arguments for Bitcoin
The Bitcoin market has been characterized by a challenging environment over recent months, marked by significant distribution, especially after the all-time high (ATH) recorded in March 2024. This phase of distribution, which saw active participation from wallets of all sizes, is now showing signs of reversing. Of particular note is the behavior of large wallets, often associated with institutional investors and exchange-traded funds (ETFs), which are now shifting towards accumulation.
The Accumulation Trend Score (ATS), a metric that measures the weighted changes in balance across the market, reached its highest value of 1.0, indicating significant accumulation over the past month. This surge in accumulation is also reflected in the activity of long-term holders (LTHs), who, after a period of heavy divestment, have added nearly 374,000 BTC to their holdings over the past three months.
Once again, LTH investors, who play a crucial role in the Bitcoin ecosystem, are expressing a strong preference to hold their coins. The 7-day change in LTH supply has returned to positive territory, confirming a reduced tendency to sell and an increased focus on accumulation. Despite the aggressive distribution from April to July, Bitcoin’s spot price has managed to remain above the active investor cost basis, a critical threshold that determines bullish and bearish investor sentiment.
The report noted that “the market’s ability to find support near this level indicates fundamental strength, suggesting that investors still generally expect positive market momentum in the near to medium term.”
bearish arguments
But the market is not without its challenges. The Cumulative Volume Delta (CVD), a measure of the net balance between buying and selling pressure in spot markets, indicates a persistent net selling pressure. The average CVD has fluctuated between -$22 million and -$50 million over the past two years, reflecting a consistent selling bias.
Interestingly, the revised version of the CVD, which takes this bias into account, showed a possible convergence with the recent failure to break above the $70,000 resistance level. This suggests that weak spot demand contributed to this technical resistance, but a demand recovery could be signaled if the revised CVD returns to positive values.
The continued accumulation by LTHs, despite volatile sideways price action, indicates a resilient and patient holder base. The percentage of Bitcoin network wealth held by LTHs remains high compared to previous ATH breaks, suggesting that these investors are unwilling to sell at current prices and may wait for higher levels before increasing their distributions.
The risk-on ratio on the short side of LTH, a measure of realized profit and loss relative to the realized market value, remains lower than in previous cycles. This suggests that profit-taking on the LTH side is relatively muted, implying that these holders are not yet inclined to liquidate their positions.
The return to accumulation by Bitcoin holders, especially LTH holders, is a potential bullish indicator for the market. The combination of resilient Bitcoin holder behavior, high network wealth held by long-term investors, and a strategic focus on accumulation despite recent market volatility points to strong fundamental conviction among investors. These developments could pave the way for a significant bullish move by Bitcoin.
At the time of publishing this report, BTC was trading at $59,138.
Featured image created using DALL.E, chart from TradingView.com