Bitcoin holders are accumulating aggressively, good news for rally
On-chain data shows that Bitcoin investors have shifted towards aggressive accumulation recently, which could help sustain the rally for longer.
Bitcoin Accumulation Trend Score has been trending towards 1 lately
According to data from the analysis company at the chain Glass node, a structural similarity is forming between the current and 2018-2019 BTC cycles. The indicator of interest here is the “accumulation trend score”, which tells us whether Bitcoin investors have been accumulating or distributing over the past month.
This metric’s value represents not only the number of coins that the holders sell or buy, but also the wallet sizes of the entities participating in the accumulation or distribution trends.
When the accumulation trend score has a value close to the 1 mark, it means that the large entities (or a large number of small investors) are currently accumulating the asset.
On the other hand, the indicator that has values close to the 0 levels suggests that holders are distributing (or alternatively just not accumulating much) at the moment.
Now, here is a chart showing the trend of the Bitcoin 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 shown in the graph above, the Bitcoin Accumulation Trend Score had assumed yellow/orange hues during the first couple of months of the recent rally. This means that the metric had values close to 0 then, indicating that a large amount of distribution was taking place from the large units.
This suggests that investors may not have thought that this rally would last too long, so they reaped the profits while they still could. However, the trend has changed during the last leg of the rally, which has taken the price close to the $30,000 level.
Interestingly, the trend that the current rally is following appears to be similar to that seen during the April 2019 rally. This second rally started due to bear market levels, just like the current one (if the worst of the bear is indeed behind the asset for this cycle ), and it also faced heavy distribution in its initial stages.
As the April 2019 rally approached the “cycle baseline” (a price that supported the asset several times throughout that cycle), investor behavior shifted towards heavy accumulation as the indicator turned dark purple (values very close to 1).
From the chart, it is visible that the rally in April 2019 gained somewhat sharply upwards after this accumulation began. As mentioned before, the recent Bitcoin rally has also changed towards accumulation lately as the price has approached the $30,000 mark.
The $30,000 level happens to be the baseline for the current cycle, meaning that this structure that the market is observing right now is reminiscent of what was seen in the 2018-2019 cycle.
If the rest of the rally also shows a similar pattern as in April 2019, the latest shift towards accumulation by investors could be positive news for the price rise.
BTC price
At the time of writing, Bitcoin is trading around $28,300, up 1% in the past week.
BTC has mostly moved sideways recently | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com
