The on-chain analytics firm Glassnode has explained why the current Bitcoin rally is looking different from the last two surges of this year.
Bitcoin Has Seen Aggressive Accumulation Throughout The Latest Rally
According to the latest weekly report from Glassnode, BTC has seen some heavy accumulation recently. The indicator of interest here is the “accumulation trend score,” which keeps track of the accumulation and distribution behavior among Bitcoin investors during the past 30 days.
The metric checks for this behavior by not only considering the balance changes happening in the wallets of the holders but also by taking into account the relative size of the investors.
When the value of this indicator is leaning toward 1, it means that the large investors have been accumulating and/or a significant number of small investors have been accumulating. On the other hand, the metric being close to the 0 mark suggests the market has been observing distribution from the holders.
Naturally, the closer the indicator is to the extremes of 1 and 0, the stronger the behavior being displayed by the investors. Now, here is a chart that shows how the value of the 7-day moving average (MA) Bitcoin accumulation trend score has changed over the past few years:
Looks like the value of the metric has been quite close to 1 in recent days | Source: Glassnode's The Week Onchain - Week 47, 2023
As displayed in the above graph, the Bitcoin accumulation trend score has had a dark purple value recently, suggesting that the market has been in aggressive accumulation mode.
Interestingly, these values very close to 1 have been sustained throughout the latest surge that the cryptocurrency has observed from below the $30,000 level and the investors are only continuing to add more to their wallets.
This is different from the behavior observed in the first two rallies of 2023, where some accumulation occurred but the market was quick to switch to heavy distribution.
To see how the accumulation is looking on the cohort level, Glassnode has also shared the data for the individual trend accumulation scores of the various wallet groups in the sector.
It would appear that the market as a whole has been accumulating recently | Source: Glassnode's The Week Onchain - Week 47, 2023
“We can see that conditions throughout 2023 have seen net outflows across several cohorts, suggesting a non-uniform behavior by different investor cohorts,” notes the analytics firm.
The non-uniform distribution behavior was maintained until October when stars started to change for the cryptocurrency. It seems like all of the cohorts switched to accumulation then and have been at it since.
“This broad uptick in accumulation means that strong market performance and increasingly optimistic hopes around a spot BTC ETF are improving investor confidence in the uptrend,” explains Glassnode.
Bitcoin has registered a pullback of 2% in the last 24 hours after Binance, the largest cryptocurrency exchange by trading volume, has seen its CEO step down from the post.
The value of the coin has seen some recovery from the initial plunge | Source: BTCUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, Glassnode.com