According to analysis from Glassnode, long-term Bitcoin holders (LTH) and large investors are returning to accumulation mode, in stark contrast to the broadly dispersed trend seen earlier this year.
Despite the ongoing market volatility, the accumulation behavior of long-term holders paints a positive picture for the Bitcoin market, signaling possible price increases.
Bullish signs for Bitcoin
The Bitcoin market, after experiencing a series of challenges, especially after reaching an all-time high in March 2024, is now showing significant changes in market concentration. Previously, the market was highly decentralized, with investors of different sizes actively participating in transactions. However, recent data suggests that the market trend is reversing, especially with large wallets typically associated with institutional investors and ETFs turning to accumulating Bitcoin.
The Accumulation Trend Score (ATS) indicator, which measures changes in the market's overall weighted balance, has reached a maximum value of 1.0, showing a significant increase in market accumulation behavior over the past month. Long-term holders (LTH) have accumulated approximately 374,000 BTC in the past three months after a period of reduction in holdings, reflecting their strong desire to hold Bitcoin.
The 7-day rate of change in LTH supply has turned positive, indicating that the selling pressure in the market is decreasing, while the willingness to accumulate is increasing. Despite the more aggressive allocations in the market from April to July, the spot price of Bitcoin remains above the cost basis of active investors, which is a key indicator of whether the market sentiment is bullish or bearish.
Glassnode’s report highlighted that the market has found support around current levels, showing strong inherent strength, which could be a sign of investors’ general expectation that the market will show positive momentum in the near term.
Bearish Factor Analysis
Despite some positive bullish signs in the market, Bitcoin's outlook is not without challenges. The Cumulative Volume Delta (CVD) indicator shows that the spot market continues to be affected by net selling pressure. Over the past two years, the median of this indicator has been fluctuating in the negative range, indicating a market preference for sellers.
In particular, the adjusted CVD indicator shows a correlation with Bitcoin’s price failing to break through the $70,000 resistance level. This may suggest a lack of demand in the spot market, but if the indicator turns positive, it may indicate a pick-up in demand and potential upward momentum in the market.
Long-term holders (LTH) continue to increase their holdings despite price volatility, showing their steadfastness and patience. Compared to historical highs, LTH's Bitcoin holdings still account for a higher proportion of network wealth, indicating that they are not in a hurry to sell at current price levels, but may be expecting higher returns.
Additionally, LTH’s sell-side risk ratio, a measure of realized profits and losses in the market, is lower than in previous cycles, suggesting that long-term holders are not taking profits en masse, further hinting at their long-term bullishness on the market.
Taken together, despite the bearish factors, the increase in holdings by Bitcoin holders, especially long-term holders, may indicate the market's optimistic expectations for future prices. This tenacious holding behavior and confidence in the market may provide a solid foundation for Bitcoin's long-term growth.
Conclusion:
The Bitcoin market presents a complex picture. The increase in holdings by long-term holders and large investors provides bullish signals, but market uncertainty and seller pressure cannot be ignored. This shows that the market is at a critical turning point, and investors need to carefully analyze and balance potential risks and opportunities.
As the market searches for a new direction, investors need to pay close attention to supply and demand dynamics and the behavior of long-term holders. If the increase in LTH holdings can continue and attract new demand into the market, Bitcoin may usher in a positive price adjustment.
On the contrary, if the selling pressure continues to dominate, the market may continue to experience a period of consolidation. Investors should carefully evaluate market signals and maintain a flexible investment strategy to cope with possible market fluctuations.
