Anika Begay
The latest insights from Glassnode’s “Week Onchain” newsletter reveal a major shift in Bitcoin market dynamics, as long-term holders (LTH) and large investors appear to be resuming an accumulation pattern. This trend marks a departure from the broad distribution seen earlier this year, offering a potential bullish outlook for Bitcoin despite ongoing volatility in the broader market.
Bullish Cases for Bitcoin
The Bitcoin market has been in a challenging environment in recent months, marked by significant distribution, especially after the all-time high (ATH) set in March 2024. This distribution phase, which saw active participation from wallets of all sizes, is now showing signs of reversing. Particularly notable is the behavior of large wallets, often associated with institutional investors and exchange-traded funds (ETFs), which are now moving towards accumulation.
The Accumulation Trend Score (ATS), a metric that measures weighted changes in the market balance, has reached its all-time high of 1.0, signaling significant accumulation over the past month. This increase in accumulation is also reflected in the activity of Long-Term Holders (LTH), who, after a period of strong divestment, have added approximately 374,000 BTC to their holdings over the past three months.
LTH, which plays a crucial role in the Bitcoin ecosystem, is once again expressing a strong preference for holding their coins. The 7-day change in LTH supply has returned to positive territory, underscoring a reduced propensity to sell and an increased focus on accumulation. Despite the aggressive distribution from April to July, the spot price of Bitcoin has managed to stay above the Active Investor Cost Basis, a critical threshold that delineates bullish and bearish investor sentiment.
“The market’s ability to find support near this level is indicative of underlying strength,” the report notes, “suggesting that investors generally still expect positive market momentum in the near to medium term.”
The bearish arguments
The market is not without its challenges. The Cumulative Volume Delta (CVD) metric, which measures the net balance of buying and selling pressure in spot markets, indicates persistent net selling pressure. The median Spot CVD has ranged from -$22 million to -$50 million over the past two years, reflecting a persistent sell bias.
Interestingly, the adjusted variant of the CVD metric, which takes this bias into account, showed a potential confluence with the recent failure to break above the $70,000 resistance level. This suggests that weak spot demand has contributed to this technical resistance, but a recovery in demand could be signaled if the adjusted CVD returns to positive values.
The ongoing accumulation by LTH, despite the choppy sideways price action, indicates a resilient and patient holder base. The percentage of Bitcoin network wealth held by LTH remains elevated compared to previous ATH breakouts, signaling that these investors are unwilling to sell at current prices and may wait for higher levels before increasing their distribution.
The LTH Sell-Side Risk Ratio, a metric that measures realized profits and losses relative to the market’s Realized Cap, remains lower than in previous cycles. This suggests that profit-taking by LTHs is relatively muted, further implying that these holders are not yet inclined to liquidate their positions.
The return to accumulation by Bitcoin holders, particularly LTH, is a potentially bullish indicator for the market. The combination of resilient holder behavior, high network wealth held by long-term investors, and a strategic focus on accumulation despite recent market volatility indicates strong underlying conviction among investors. These developments could set the stage for a significant upside move in Bitcoin.
At press time, BTC was trading at $59,138.
Featured image created with DALL.E, chart from TradingView.com
