Bear markets are typically marked by a capitulation event where discouraged investors finally abandon their positions and asset prices either consolidate as inflows to the sector taper off or a bottoming process begins.
According to a recent report from Glassnode, Bitcoin hodlers are now “the only ones left” and they appear to be “doubling down as prices correct below $30K.”
Evidence of the lack of new buyers can be found looking at the number of wallets with non-zero balances, which has plateaued over the past month, a process that was seen after the crypto market sell-off in May of 2021.
Number of Bitcoin addresses with a non-zero balance. Source: Glassnode
Unlike the sell-offs that occurred in March 2020 and November 2018, which were followed by an upswing in on-chain activity that “initiated the subsequent bull runs,” the most recent sell-off has yet to “inspire an influx of new users into the space.” Glassnode analysts say this suggests that the current activity is predominantly being driven by hodlers.
Signs of heavy accumulation
While many investors are disinterested in BTC’s sideways price action, contrarian investors view it as an opportunity to accumulate, a point evidenced by the Bitcoin accumulation trend score which “has returned a near perfect score above 0.9” for the past two weeks.
Bitcoin accumulation trend score. Source: Glassnode
According to Glassnode, high scores on this metric during bearish trends “generally trigger after a very significant correction in price as investor psychology shifts from uncertainty to value accumulation.”
The idea that Bitcoin is currently in an accumulation phase was also noted by CryptoQuant CEO Ki Young Ju, who posted the following tweet asking his Twitter followers “Why not buy?”
A closer look at the data shows that the recent accumulation has been largely driven by entities with less than 100 BTC and entities with more than 10,000 BTC.
In the recent volatility, the aggregate balance of entities holding less than 100 BTC increased by 80,724 BTC, which Glassnode noted was “remarkably similar to the net 80,081 BTC liquidated by the LUNA Foundation Guard.”
Bitcoin supply held by entities with less than 100 BTC. Source: Glassnode
Entities with holdings in excess of 10,000 BTC added 46,269 Bitcoin to their balance during this same time period, while entities holding 100 BTC to 10,000 BTC “maintained a more neutral rating around 0.5, suggesting relatively little net change to their holdings.”
Long-term hodlers are still active
Long-term Bitcoin holders appear to be the main driving force behind the current price action with some actively accumulating and others realizing losses at an average of -27%.
Bitcoin long term holder spent output profit ratio. Source: Glassnode
Despite the selling witnessed by some in the long-term holder cohort, the total supply held by these wallets recently returned to its all-time high of 13.048 million BTC.
“Unless significant coin redistribution occurs, we can therefore expect this supply metric to commence climbing over the course of the next 3-4 months, suggesting HODLers continue to gradually soak up, and hold onto supply.”
The recent volatility may have pushed out some of the most dedicated Bitcoin holders but the data shows that a majority of serious holders are unwilling to spend their supply “even if it is now held at a loss.”
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