The latest insights from Glassnode’s “Week Onchain” newsletter reveal a major shift in Bitcoin market dynamics as long-term holders (LTHs) and large investors appear to resume a pattern of accumulation. This trend marks a departure from the extended distribution seen earlier this year, presenting a potentially bullish outlook for Bitcoin despite the broader market’s continued volatility.

The Bullish Case for Bitcoin

The Bitcoin market has been characterized by a challenging environment in recent months, marked by significant distribution, especially after the all-time high (ATH) reached in March 2024. This distribution phase, in which wallets of all sizes actively participated, is now showing signs of reversal. Particularly notable is the behavior of large wallets, often associated with institutional investors and exchange-traded funds (ETFs), which are now shifting towards accumulation.

The Accumulation Trend Score (ATS), a metric that evaluates weighted balance changes in the market, has reached its maximum value of 1.0, indicating significant accumulation over the past month. This increase in accumulation is also reflected in the activity of Long-Term Holders (LTHs), who have added approximately 374,000 BTC to their holdings over the past three months after a period of heavy divestment.

LTHs, which play a crucial role in the Bitcoin ecosystem, are once again showing their willingness to hold onto their coins. The 7-day change in LTH supply has turned positive again, highlighting a reduced tendency to sell and a greater focus on accumulation. Despite the aggressive distribution from April to July, Bitcoin’s spot price has managed to remain above the Active Investor Cost Basis, a critical threshold that indicates both bullish and bearish investor sentiment.

“The market’s ability to find support near this level demonstrates underlying strength,” the report said, “suggesting that investors continue to broadly expect positive market momentum in the near to medium term.”

The bearish arguments

The market has its challenges. The Cumulative Volume Delta (CVD) metric, which estimates the net balance between buying and selling pressure in spot markets, indicates a persistent net selling pressure. The median value of Spot CVD has fluctuated between -$22 million and -$50 million over the past two years, reflecting a consistent selling bias.

Interestingly, the adjusted variant of the CVD metric, which takes this bias into account, has shown a possible coincidence with the recent failure to break above the $70,000 resistance level. This suggests that weakness in spot demand has contributed to this technical resistance, but a recovery in demand could be signaled if the adjusted CVD returns to positive values.

The continued accumulation by LTHs despite the erratic sideways price action indicates a resilient and patient holder base. The percentage of Bitcoin network wealth held by LTHs remains high compared to previous ATH breakouts, indicating that these investors are unwilling to sell at current prices and may be waiting for higher levels before increasing their distribution.

The LTH Sell-Side Risk Ratio, a measure of realized profit and loss relative to the market’s Realized Cap, remains lower than in previous cycles. This suggests that profit taking by LTHs is relatively muted, further implying that these holders are not yet inclined to liquidate their positions.

The return to accumulation by Bitcoin holders, particularly LTHs, is a potentially bullish indicator for the market. The combination of resilient holder behavior, increased network wealth in the hands of long-term investors, and a strategic focus on accumulation despite recent market volatility points to strong underlying conviction among investors. These developments could set the stage for a significant upward move by Bitcoin.

At the time of writing, BTC was trading at $59,138.

Main image created with DALL.E, chart from TradingView.com