Investor Sentiment Amid Market Downturn
As the cryptocurrency market endures its most significant downturn in this cycle, investor sentiment remains ambivalent. However, beneath the surface, recent analysis by Glassnode reveals clear indications of a resurgence in HODLing and accumulation among investors.
Signs of Accumulation
Glassnode’s examination of on-chain investor behavior during these turbulent market conditions shows an increasing tendency towards HODLing. Following bitcoin’s all-time high in March, the market underwent an extended period of supply distribution, impacting wallets of various sizes. Yet, in recent weeks, this pattern appears to be reversing, particularly among larger wallets commonly associated with ETFs. This group of investors is seemingly returning to a phase of accumulation.
The Accumulation Trend Score (ATS) from Glassnode, which measures a weighted balance change across the market, also indicates a shift back toward accumulation-focused behavior. This renewed emphasis on accumulation has propelled the ATS to its peak value of 1.0, reflecting significant accumulation activity over the past month.
Long-Term Holders (LTH) had previously sold off a substantial amount during the lead-up to the all-time high. However, this group has now resumed HODLing, with over 374,000 BTC transitioning into LTH status in the last three months. Glassnode deduces that “the inclination for investors to retain their coins has become a more dominant force compared to spending pressures.”
“We are witnessing considerable LTH distribution, characteristic of macro topping formations, leading into the March ATH. Fewer than 1.7% of trading days have recorded higher distribution pressure. Recently, this metric has returned to positive territory, suggesting that the LTH group prefers to hold onto their assets,” the report states.
When Will a Rebound Occur?
The Active Investor’s Cost-Basis serves as a critical indicator for assessing whether investors are feeling optimistic or pessimistic about the market. Given that the market has stabilized around this threshold, Glassnode asserts that this stability indicates some strength, with investors still anticipating market improvement in the near future.
Furthermore, the report notes that bitcoin’s inability to surpass the $70,000 mark may be partially attributed to a decline in current buying interest, reflected in a negative Adjusted Spot CVD. Nevertheless, should buying interest rebound and the Adjusted Spot CVD metric turn positive again, it could herald a potential resurgence in demand.
