Bitcoin Struggles with Accumulation Trend as Price Recovers
Bitcoin’s price recovery has been short-lived, with the Accumulation Trend Score remaining below 0.5, indicating weak accumulation among investors. Glassnode’s analysis shows a prolonged distribution phase alongside fragility among short-term holders. The market dynamics suggest challenges for Bitcoin’s price stability moving forward.
Bitcoin recently experienced notable upward movements after a prolonged period of bearish pressure; however, this upward trend was brief, leading to a decline to the $85,200 threshold. Amid these fluctuations, investor interest in Bitcoin appears to have waned, as evidenced by a lack of accumulation activity.
Glassnode, a prominent on-chain data and financial analytics firm, has conducted an analysis highlighting Bitcoin’s lack of accumulation amidst sideways market movement. Their observations reveal that the Accumulation Trend Score has consistently remained below 0.5, signaling weak accumulation among significant investors, despite recent price changes.
Specifically, the Accumulation Trend Score, which captures the level of Bitcoin purchases by various market participants, indicates that while some investors continue to acquire BTC, the overall trend suggests diminishing accumulation efforts. The score has languished below 0.5 for over 58 days, indicating a prolonged net distribution phase that aligns with historical patterns observed over the past year.
Moreover, Glassnode notes that distribution phases have averaged 65 days, compared to 57 days for accumulation cycles over the last year. Bitcoin has spent approximately 170 days above the 0.5 threshold during accumulation and around 196 days in the distribution phase. Currently, the trend score at 0.9 suggests that large entities are still distributing more effectively and have not transitioned into a substantial accumulation phase.
The situation for short-term Bitcoin holders remains precarious as price fluctuations persist. Prior to a recent downturn, Bitcoin had temporarily recovered past its Short-Term Holder Cost Basis; however, it is now trading below that critical level. Glassnode reports that the Market Value to Realized Value (MVRV) ratio for short-term holders stands at 0.00, indicating near-breakeven conditions with a paper loss of 1%.
Furthermore, the short-term holder Spent Output Profit Ratio (SOPR) has declined during recent bearish tendencies. After dipping significantly below its quarterly median, it has since recovered to the upper deviation band, possibly indicating renewed demand absorption and improved market sentiment following a capitulation phase among short-term holders.
In summary, Bitcoin’s Accumulation Trend Score has remained below 0.5 for an extended duration, indicating weak accumulation by large investors despite recent price movements. Short-term holders are also facing challenges with profitability nearly at breakeven. The trends point to continued distribution rather than accumulation, which may affect Bitcoin’s price stability in the near future.
Original Source: bitcoinist.com
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