Latest Insights from Glassnode’s “Week Onchain” bulletin reveals a significant shift in Bitcoin market dynamics, as long-term holders (LTH) and enormous investors appear to be returning to an accumulation pattern. This trend marks a departure from the broad distribution seen earlier this year, offering a potentially bullish outlook for Bitcoin despite the ongoing volatility of the broader market.
Bullish Case for Bitcoin
The Bitcoin market has been characterized by a hard environment in recent months, characterized by significant distribution, especially after reaching an all-time high (ATH) in March 2024. This distribution phase, in which portfolios of all sizes actively participated, is now showing signs of reversal. Of particular note is the behavior of enormous portfolios, often associated with institutional investors and ETFs, which are currently moving towards accumulation.
The Accumulation Trend Score (ATS), an indicator that evaluates weighted changes in market balance, has reached a maximum value of 1.0, signaling significant accumulation over the past month. This escalate in accumulation is also reflected in the activity of Long-Term Holders (LTH), who, following a period of massive selling, have added around 374,000 BTC to their holdings over the past three months.
LTH, which plays a key role in the Bitcoin ecosystem, is once again expressing a powerful preference for holding its coins. The 7-day change in LTH supply has returned to positive territory, highlighting a reduced propensity to sell and an increased focus on accumulation. Despite the aggressive distribution from April to July, Bitcoin’s spot price has managed to stay above the Energetic 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 its underlying strength,” the report noted, “suggesting that investors generally still expect positive market momentum in the near to medium term.”
Bearish arguments
The market is not without its challenges. The Cumulative Volume Delta (CVD) indicator, which estimates the net balance between buying and selling pressure in spot markets, indicates continued net selling pressure. The median Spot CVD has ranged from -$22 million to -$50 million over the past two years, reflecting continued selling bias.
Interestingly, the adjusted version of the CVD metric, which takes this deviation into account, showed a potential connection to the recent failure to break through the $70,000 resistance level. This suggests that weakness in spot demand contributed to this technical resistance, but a recovery in demand could be signaled if the adjusted CVD returns to positive territory.
The ongoing accumulation by LTH, despite the volatile sideways price action, indicates a resilient and patient holder base. The percentage of Bitcoin network wealth held by LTH remains elevated compared to previous all-time highs, signaling that these investors are not willing to sell at current prices and may be waiting for higher levels before increasing distribution.
The LTH Sell-Side Risk Ratio, a metric that measures realized profit and loss relative to realized market capitalization, remains lower than in previous cycles. This suggests that profit taking by LTH is relatively muted, further suggesting that these holders are not yet willing 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, elevated on-chain wealth held by long-term investors, and a strategic focus on accumulation despite recent market volatility indicates powerful investor conviction. These events could set the stage for a significant upside move for Bitcoin.
At the time of going to press, the BTC price was $59,138.
Featured image created with DALL.E, chart from TradingView.com
