TL;DR
- HODLing Trend: Despite recent market volatility, Bitcoin holders are showing a preference for HODLing, with large wallets, often linked to ETFs, returning to accumulation.
- Accumulation Metrics: The Accumulation Trend Score (ATS) has reached its highest value of 1.0, indicating significant accumulation, especially among Long-Term Holders (LTH), who have added over 374k BTC in the past three months.
- Market Resilience: The spot price remains above the Active Investor Cost Basis, suggesting underlying market strength and positive investor sentiment, despite a technical downtrend and net sell-side pressure in spot markets.
As the market begins to slowly recover from last week’s sell-off, there is a discernible level of uncertainty and indecision among digital asset investors. Nevertheless, when analyzing the on-chain response of investors to these choppy Bitcoin market conditions, a trend of a preference for HODLing is beginning to emerge.
Since Bitcoin’s price reached its all-time high (ATH) in March, the market faced an extensive period of supply distribution, with participation by wallets of all sizes.
In recent weeks, there have been initial indications that this trend may be shifting, especially among the largest wallet sizes typically linked to ETFs. It seems that these substantial wallets are starting to embrace a phase of accumulation once again.
Bitcoin’s Accumulation Trend Score (ATS)
The Accumulation Trend Score (ATS) measures the weighted changes in balance throughout the market. This metric indicates a return to a trend where accumulation is the prevailing behavior.
The aforementioned shift towards accumulation has contributed to the ATS recording its highest possible value of 1.0, suggesting significant accumulation throughout the last month.
This trend is reflected among Long-Term Holders (LTH), who significantly sold off their assets leading up to the all-time high (ATH). Now, this group has shifted back to a HODLing strategy, with over 374,000 BTC transitioning into LTH status in the past three months.
This suggests that the tendency for investors to retain their coins has become a more significant influence compared to the pressures they face to spend.
Evaluating Bias in Spot Markets
Even with the intense distribution occurring from April to July, the spot price has remained consistently above the Active Investor Cost Basis, indicating the average purchase price of active coins in the market.
The Active Investor’s Cost-Basis serves as a crucial indicator that separates bullish from bearish investor sentiment. The market’s ability to establish support around this level indicates a certain level of resilience, implying that investors are largely optimistic about potential market gains in the near to medium future.
With the market within a technical downtrend, we can employ the CVD metric to estimate the present net balance between market buying and selling pressure in spot markets.
Positive CVD values suggest a net buy-side pressure, whereas negative values infer a net sell-side pressure. When analyzing the yearly median value of Spot CVD, it has fluctuated between -$22 million and -$50 million over the last two years, suggesting the presence of a net-sell side bias.
