Glassnode has talked about the four phases of Bitcoin accumulation and distribution during the past year in their latest report.
Bitcoin Accumulation Trend Score Shows Market Has Been Selling Recently
As per this week’s edition of the weekly Glassnode report, the market has observed four distinct phases in the last twelve months.
The relevant indicator here is the “accumulation trend score,” which tells us about whether market participants are accumulating or not right now.
Not only does the metric check how much investors are buying/selling, but it also takes into account the size of holdings of these participants. As such, the score provides a higher weightage to larger holders accumulating/distributing.
When the value of this metric is closer to 1, it means that big participants or a large part of the network has been accumulating during the past month.
On the other hand, the indicator’s value being near zero implies large holders have either not been accumulating recently, or outright distributing their coins.
Now, here is a chart that shows the trend in the Bitcoin accumulation trend score during the last year:
The value of the metric seems to have been closer to zero in recent days | Source: Glassnode's The Week Onchain - Week 36, 2022
As you can see in the above graph, the market seems to have gone through four phases of the Bitcoin accumulation trend score over this period.
Following the all-time high back in November, investors aggressively accumulated the “dip” as the value of the indicator was almost exactly 1. This marked the first of these phases.
Next, as the price slowly came down, these recent accumulators went into significant loss. This lead to the holders shifting to a trend of distribution.
In the third phase, even though the price plunged down even harder as the LUNA collapse took place, investors once again started accumulating as if attempting to catch the bottom.
After this months of accumulation, the market finally saw a rally above $24k. However, instead of continuing to buy more, holders quickly latched onto this opportunity of exit liquidity and engaged in profit-taking.
As a result of this distribution, this new fourth phase has observed Bitcoin accumulation trend score values close to zero.
At the time of writing, Bitcoin’s price floats around $19.8k, down 2% in the past week. Over the last month, the crypto has lost 15% in value.
The below chart shows the trend in the price of the coin over the past five days.
Looks like the value of the crypto is still moving sideways | Source: BTCUSD on TradingView
Featured image from Yiğit Ali Atasoy on Unsplash.com, charts from TradingView.com, Glassnode.com