Bitcoin Holders Aggressively Accumulate, Good News For Rally
On-chain data shows that Bitcoin investors have shifted towards aggressive accumulation recently, something that could help sustain the rally longer.
Bitcoin Accumulation Trend Score trended towards 1 recently
According to data from on-chain analytics firm glassnode, there is a structural similarity brewing between the current and 2018-2019 BTC cycles. The indicator of interest here is the “accumulation trend score”, which tells us whether Bitcoin investors accumulated or distributed in the last month.
The value of this metric represents not only the number of coins that holders are selling or buying, but also the size of portfolios of entities participating in accumulation or distribution trends.
When the accumulation trend score has a value close to the 1 mark, it means that large entities (or a large number of small investors) are currently accumulating the asset.
On the other hand, the indicator with values close to the 0 levels suggests that holders are distributing (or, alternatively, just not accumulating much) at the moment.
Now, here’s a graph that shows the trend in Bitcoin’s Accumulation Trend Score over the last few years:
The value of the metric seems to have been close to the one mark recently | Source: Glassnode on Twitter
As displayed in the chart above, Bitcoin’s accumulation trend score took on shades of yellow/orange during the first few months of the latest rally. This means that the metric had values close to 0 then, implying that a large amount of distribution was taking place on the large entities.
This suggests that investors may not have thought this rally would last long, so they were reaping their profits while they still could. The trend, however, changed during the last leg of the rally, which took the price close to $30,000.
Interestingly, the trend that the current rally is following appears to be similar to what was seen during the April 2019 rally. behind the asset for this cycle), and also faced heavy distribution in its early stages.
As the April 2019 rally approached the “cycle baseline” (a price that supported the asset multiple times throughout that cycle), investor behavior shifted to heavy accumulation as the indicator turned dark purple (very high values). close to 1).
On the chart, it is visible that the April 2019 rally gained strong bullish momentum after the start of this buildup. As mentioned earlier, Bitcoin’s latest rally has also shifted into accumulation recently as the price has approached the $30,000 mark.
The $30,000 level is the baseline of the current cycle, meaning that this structure that the market is now observing is reminiscent of what was seen in the 2018-2019 cycle.
If the remainder of the rally also shows a pattern similar to that of April 2019, the latest shift towards accumulation by investors could be positive news for rising prices.
BTC price
At the time of writing, Bitcoin is trading around $28,300, up 1% over the past week.
BTC has mostly moved sideways recently | Source: BTCUSD on TradingView
Featured Image of Kanchanara from Unsplash.com, Charts from TradingView.com, Glassnode.com