Recent increase in short-term Bitcoin buyers may signal accumulation phase
Bitcoin recently surged past the $25,000 mark in a recent rally, but given the way the leading cryptocurrency has been behaving lately, investors have to wonder if it’s a flash rally or something more sustainable. Recent short-term buying activity may point to potential long-term support.
According to a Cointelegraph article, recent short-term buying of bitcoin may foretell a sustained accumulation phase. According to the article, there has been a “recent surge in short-term Bitcoin (BTC) holders could signal a ‘final flush’ of sellers, meaning the capitulation events have played out, setting the market up for months of accumulation.”
“The latest ‘The Week On Chain’ report from market research firm Glassnode on Monday notes that short-term holders (STHs) have expanded their holdings by 330,000 BTC since May’s catastrophic Terra collapse,” the report added, noting the collapse of certain cryptocurrency coins in what has been something of a purge in the crypto market. “As a result, they can be the canary in the coal mine that signals the way to market recovery.”
Mirror a standard economic cycle
The accumulation phase is akin to the expansion phase of an economic cycle. An expansion is preceded by the bottom, which is characterized by a point of low economic growth just before recovery.
Bitcoin, and the entire cryptocurrency market, experienced its own version of a trough in the first half of 2022 with major selling. The month of July could potentially be the start of a comeback, which happened the year before before bitcoin skyrocketed to a new all-time high in late 2021.
After a dramatic capitulation event, the ownership structure of #Bitcoin has been reshaped.
As markets sell off, $BTC migrating from weaker hands, to those entering the lowest. Here we explore how we can track this migration of coins using age groups.
— glassnode (@glassnode) 15 August 2022
In contrast to accumulating bitcoin, investors can also choose to gain exposure to futures contracts in bitcoin via ProShares Bitcoin ETF (BITO). With cryptocurrency regulation still in its infancy, BITO will allow investors to gain bitcoin exposure on a traditional market exchange.
Furthermore, BITO is actively managed, giving investors dynamic exposure to the bitcoin futures market. This puts portfolio management in the hands of market experts who can increase or decrease exposure to contracts given the current nature of the ever-changing, volatile crypto market.
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